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

Authors

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.

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Recommended Citation

Chauhan, Yogesh; Ghosh, Chinmay; Jaiswal, Manju; and Zhao, Zizheng (2025) "The Influence of National Culture on Corporate Policy: Evidence from the Payment Method in International Mergers," American Business Review: Vol. 28: No. 2, Article 5.
DOI: 10.37625/abr.28.2.420-454
Available at: https://digitalcommons.newhaven.edu/americanbusinessreview/vol28/iss2/5

DOI

10.37625/abr.28.2.420-454