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The Influence of National Culture on Corporate Policy: Evidence from the Payment Method in International Mergers

Author

Listed:
  • Yogesh Chauhan

    (Indian Institute Of Management–Raipur (IIM–Raipur), Chhattisgarh, India)

  • Chinmay Ghosh

    (University of Connecticut, Storrs, Connecticut, U.S.A.)

  • Manju Jaiswal

    (Indian Institute of Management–Calcutta (IIM–Calcutta), West Bengal, India)

  • Zizheng Zhao

    (University of Connecticut, Storrs, Connecticut, U.S.A.)

Abstract

We examine how informal institutions—specifically, national culture—shape the choice of payment methods in cross-border mergers and acquisitions (M&As). Our analysis reveals that acquirers from countries with high levels of individualism are less likely to finance acquisitions using stock. In contrast, acquirers from cultures with high uncertainty avoidance are more inclined to do so. Furthermore, the negative association between individualism and stock financing is more pronounced in transactions with greater anticipated synergy gains. These results are robust to a range of firm-level controls, country-specific factors, and alternative proxies for national culture.

Suggested Citation

  • Yogesh Chauhan & Chinmay Ghosh & Manju Jaiswal & Zizheng Zhao, 2025. "The Influence of National Culture on Corporate Policy: Evidence from the Payment Method in International Mergers," American Business Review, Pompea College of Business, University of New Haven, vol. 28(2), pages 420-454, November.
    • Handle: RePEc:ris:ambsrv:021855
    DOI: 10.37625/abr.28.2.420-454
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    Keywords

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    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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