Revisiting the Effect of Cultural Similarities on Mergers & Acquisitions

Abstract

Our research study investigates the relationship between cultural similarities in CSR policies and M&As results. This research builds upon Bereskin et al. (2018) by examining how CSR Strength and CSR Concern dimensions affect M&A occurrence rates, as well as both Cumulative Abnormal Returns (CARs) and post-merger operating performance. The research demonstrates that both CSR similarity dimensions enhance M&A deal success through better negotiation processes and stakeholder trust development. Our results for the CARs tests do not show a significant influence of either firm's CSR Strength or Concern similarity. Post-merger performance shows evidence of positive effects from CSR Concern, yet CSR Strength fails to produce significant effects, which demonstrates complex interactions that affect long-term results. The research demonstrates to practitioners and policymakers that CSR-based cultural alignment creates successful M&A strategies through its presentation of this need. Future research should analyze different CSR aspects with their market-wide effects across various market environments. The research contributes to corporate strategy and CSR knowledge by demonstrating how cultural alignment leads to successful M&As in the current globalized business environment.