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Trust asymmetry and cross-border merger withdrawals: a global perspective

Author

Listed:
  • Muhammad Farooq Ahmad

    (SKEMA Business School)

  • Saqib Aziz

    (Rennes SB - Rennes School of Business)

  • Rwan El-Khatib

    (Zayed University)

  • Duc Khuong Nguyen

    (VSE - Prague University of Economics and Business, Department of Land Economy, University of Cambridge)

Abstract

We empirically examine how trust asymmetry between countries can impact the cross-border merger outcome. Differing trust perceptions between acquirer and target countries can increase the complexities of deal negotiations and integration, constraining the successful deal completion and outcome. We find, in a comprehensive global sample of 56 countries spanning 37 years, that higher trust asymmetries between the acquirer and target countries significantly increases the cross-border merger withdrawal intensity and reduces the expected synergy gains. Moreover, the adverse effects of trust asymmetry are significantly attenuated by the quality of institutions in both countries. Our results hold after employing various empirical techniques to address endogeneity, omitted variable bias, and reverse causality. Overall, this study highlights the importance of trust asymmetry in shaping global economic outcomes.

Suggested Citation

  • Muhammad Farooq Ahmad & Saqib Aziz & Rwan El-Khatib & Duc Khuong Nguyen, 2026. "Trust asymmetry and cross-border merger withdrawals: a global perspective," Post-Print hal-05601230, HAL.
    • Handle: RePEc:hal:journl:hal-05601230
    DOI: 10.1016/j.intfin.2026.102337
    Note: View the original document on HAL open archive server: https://hal.science/hal-05601230v1
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