Corporate Social Responsibility Culture and International M&As

64 Pages Posted: 28 Aug 2018 Last revised: 23 Jul 2021

See all articles by George Alexandridis

George Alexandridis

ICMA Centre, Henley Business School

Andreas G. F. Hoepner

Smurfit Graduate Business School, University College Dublin; European Commission's Platform on Sustainable Finance

Zhenyi Huang

Cass Business School, City University of London

Ioannis Oikonomou

University of Reading - ICMA Centre

Date Written: November 16, 2020

Abstract

We examine the role of corporate culture in M&As by utilizing a unique corporate social responsibility (CSR) dataset, providing in-depth information on multiple dimensions of organizational culture in 22 developed markets. In accordance with the prediction of the culture clash theory, a wider divergence between the corporate cultures of the acquiring and target firms is associated with lower acquirer announcement and long-run returns as well as synergistic gains for the combined firm. Cultural misalignment also increases the time required to finalise a deal, reduces the likelihood of deal completion and the percentage of stock payment. Our results are robust to alternative explanations (e.g. similarities in national culture, acquirer CSR performance), different regression specifications, and additional cultural misalignment measures. Our findings highlight the importance of the need for a deeper understanding of the role of CSR for the target selection process, integration planning, and financing choice of M&As to corporations and their investors.

Keywords: Mergers and Acquisitions; Organizational Culture; Corporate Social Responsibility; Synergy

JEL Classification: G14; G34; M14

Suggested Citation

Alexandridis, George and Hoepner, Andreas G. F. and Huang, Zhenyi and Oikonomou, Ioannis, Corporate Social Responsibility Culture and International M&As (November 16, 2020). Forthcoming, British Accounting Review. Previous version circulated as Michael J. Brennan Irish Finance Working Paper Series Research Paper No. 21-9, Available at SSRN: https://ssrn.com/abstract=3233616 or http://dx.doi.org/10.2139/ssrn.3233616

George Alexandridis

ICMA Centre, Henley Business School ( email )

Whiteknights Campus
P.O. Box 242
Reading, RG6 6BA
United Kingdom
+44 (0) 118 378 4387 (Phone)

Andreas G. F. Hoepner

Smurfit Graduate Business School, University College Dublin ( email )

Blackrock, Co. Dublin
Ireland

European Commission's Platform on Sustainable Finance ( email )

2 Rue de Spa
Brussels, 1000
Belgium

Zhenyi Huang (Contact Author)

Cass Business School, City University of London ( email )

London, EC2Y 8HB
United Kingdom

Ioannis Oikonomou

University of Reading - ICMA Centre ( email )

Whiteknights Park
P.O. Box 242
Reading RG6 6BA
United Kingdom

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