Cultural Integration in Mergers and Acquisitions: Impact on Financial and Deal Dynamics
DOI:
https://doi.org/10.5281/zenodo.15780133Keywords:
natural language processing, corporate cultureAbstract
We examine the influence of corporate culture on M&A outcomes by analyzing text data from 10-K filings using the culture dictionary developed by Li et al. (2021) and employing Natural Language Processing (NLP) techniques. Individual cultural dimensions—innovation, integrity, quality, respect, and teamwork — affect various M&A metrics. Specifically, respect enhances cumulative abnormal returns for both acquiring and target firms, while innovation and quality improve the long-term financial performance of acquiring firms, boosting profitability and valuation. Integrity within the target firm and quality within the acquired firm's culture positively influence deal premiums. Robust cultural values, including innovation, integrity, and quality, facilitate quicker deal completions. Interestingly, teamwork exhibits no significant impact on M&A outcomes. This research underscores the strategic importance of cultural alignment in M&A and is supported by case studies that illustrate these findings and their practical implications.
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