Cultural tightness–looseness and inter‐regional mergers and acquisitions: Evidence from China

Abstract

We investigated the role of culture in inter‐regional mergers and acquisitions (M&As) within national borders, using a dataset that includes M&As conducted by Chinese listed firms from 2005 to 2019. Our research provides compelling evidence that the likelihood of an acquirer initiating a merger proposal – and the subsequent probability of reaching an agreement – decreases as the cultural tightness gap between the acquiring and target firms widens. Furthermore, we found that this negative impact of cultural tightness distance is more pronounced in non‐state‐owned firms and firms led by younger CEOs.