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Extraversion, individualism and M&A activities

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  • Chan, Alex W.H.
  • Cheung, Hoi Yan

Abstract

Previous studies have documented that variations in economic and business environments can explain the patterns of mergers and acquisitions (M&A) across different countries. We investigated these patterns from a psychological perspective and found that the personality trait of extraversion and the cultural dimension of individualism (IDV) also affected the patterns of M&A activities across countries. Our results suggest that the psychological characteristics of corporate decision makers play a very important role in the M&A decision-making process, even after controlling for external economic and business factors. Furthermore, IDV significantly mediates the relationship between extraversion and M&A activities. This result provides support for the reverse causation hypothesis.

Suggested Citation

  • Chan, Alex W.H. & Cheung, Hoi Yan, 2016. "Extraversion, individualism and M&A activities," International Business Review, Elsevier, vol. 25(1), pages 356-369.
    • Handle: RePEc:eee:iburev:v:25:y:2016:i:1:p:356-369
    DOI: 10.1016/j.ibusrev.2015.05.011
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    More about this item

    Keywords

    Mergers and acquisitions; Hofstede's cultural dimensions; Individualism; Extraversion; Reverse causation hypothesis;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • Z1 - Other Special Topics - - Cultural Economics
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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