Do Cross-Border M&As Create Value? Evidence from Overseas Acquisitions by Chinese Firms

The number of multinational corporations (MNCs) from emerging economies is rising. As late-comers, could they conquer cultural problems and catch up through cross-border M&As? In this study, utilizing a sample of cross-border M&As conducted by Chinese listed companies, we find that on average cross-border M&As create value for shareholders of acquiring MNCs and that cultural distance negatively affects value creation. We also find that firms with more resources (e.g. large firms) are less affected by cultural distance, while financial advisors and acquisition experiences do not seem to help. Our study contributes to the understanding of the effectiveness of internationalization of late-coming MNCs from emerging economies and the importance of dealing with culture differences in this process.