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National Culture and Takeover Contest Outcomes

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  • Magnus Blomkvist
  • Karl Felixson
  • Timo Korkeamäki

Abstract

We examine the effects of cultural differences on the outcome of takeover contests. Our main focus is on individuality, which we posit to have an effect on firm behavior in international takeover contests. In a sample of international acquisitions with bidders from multiple countries, we find that individuality positively relates to the probability of placing the winning bid. We further find that takeover contest winners with high individuality scores experience lower announcement returns. Our results are consistent with the literature that links individuality to overconfidence. Our evidence suggests that firms should control culture‐related behavioral biases in their mergers and acquisitions activity.

Suggested Citation

  • Magnus Blomkvist & Karl Felixson & Timo Korkeamäki, 2018. "National Culture and Takeover Contest Outcomes," The Financial Review, Eastern Finance Association, vol. 53(3), pages 605-625, August.
    • Handle: RePEc:bla:finrev:v:53:y:2018:i:3:p:605-625
    DOI: 10.1111/fire.12158
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    Cited by:

    1. James A. Brander & Edward J. Egan & Sophie Endl, 2021. "Comparing CEO Compensation Effects of Public and Private Acquisitions," JRFM, MDPI, vol. 14(4), pages 1-19, April.
    2. Gaganis, Chrysovalantis & Pasiouras, Fotios & Wohlschlegel, Ansgar, 2021. "Allocating supervisory responsibilities to central bankers: Does national culture matter?," International Review of Law and Economics, Elsevier, vol. 67(C).

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