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Geographical and cultural patterns in cross-border mergers and acquisitions: the role of experience

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  • Massimo Del Gatto
  • Carlo S. Mastinu

Abstract

We exploit temporal and spatial correlation in a cross-border merger and acquisition (M&A) database with worldwide coverage to show that firms’ M&A choices are significantly influenced by experience effects related to knowledge accumulation. Our empirical strategy rests on the assumption that experience effects are expected to be at play in M&A directed toward culturally contiguous countries (arguably driven by knowledge accumulation) and not in M&A deals in geographically contiguous countries (arguably driven by transport costs). The analysis is conducted on a bilateral measure of cultural distance (encompassing linguistic, religious and genetic distance indicators), which is meant to capture the idea of the cultural heritage originated by historic linkages.

Suggested Citation

  • Massimo Del Gatto & Carlo S. Mastinu, 2021. "Geographical and cultural patterns in cross-border mergers and acquisitions: the role of experience," Spatial Economic Analysis, Taylor & Francis Journals, vol. 16(4), pages 487-505, October.
    • Handle: RePEc:taf:specan:v:16:y:2021:i:4:p:487-505
    DOI: 10.1080/17421772.2020.1861321
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