Cultural Differences in Firm Acquisitions: The Role of Corporate Governance

We collect 93 samples of the cross-border mergers and acquisitions, which happened from 2006 to 2012 in China. Through empirical analysis, on the basis of studying the influence of cultural differences on the performance of cross-border M&A, the moderating effect of corporate governance characteristics on the relationship between cultural differences and performance is also studied. The study fmds that cultural differences have a negative impact on the performance of cross-border mergers and acquisitions in the short term, but the opposite in the long term. Meanwhile, with the proportion of independent directors increasing, the negative impact of cultural differences on the performance of cross-border M&A will be reduced. However, the negative impact of cultural differences on the performance of cross-border M&A will be enhanced with the shareholding ratio of the top ten shareholders increasing and the monetary compensation of executives improving. This paper provides some effective suggestions for the enterprises to improve the corporate governance mechanism and formulate reasonable cultural integration strategy.