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Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Elizaveta Kuznetsova
The Impact of Religious Differences on the Performance of Cross-Border M&A Deals Initiated by Companies from Developed Capital Markets
Economics
(Bachelor’s programme)
2018
Differences in culture and religion along with other mostly financial factors cannot be ignored when examining the effectiveness of cross-border mergers and acquisitions as many researches think that more than a half of inefficient deals for the acquirer (which share is 14% in the total number of transactions) is explained by these two non-financial factors [Malhotra, Sivakumar, Zhu, 2011].

The aim of the paper is to reveal the influence of religious distance between countries on the effectiveness of cross-border M&A deals initiated by companies from developed markets. To achieve this goal, I conducted a literature review on the effectiveness of cross-border deals initiated by companies from developed markets, as well as analysis covering cultural and religious differences and their impact on the characteristics of companies and the effectiveness of deals. Further, hypotheses were put forward and an econometric model for estimating the effectiveness of cross-border M&A deals was constructed.

Based on a sample of 2,047 cross-border deals in the period from 2010 to 2017, where buyer companies are located in 18 different developed countries, and target companies - in 18 developed and 26 developing by the method of cumulative abnormal return (CAR) we found that on average cross-border deals initiated by companies from developed countries are effective. Moreover, according to our results, cross-border deals initiated by companies from developed countries are more effective if the target company is located in developed markets. There was also a significant positive impact of religious differences between countries on the effectiveness of cross-border mergers and acquisitions that can be explained by the greater autonomy of the companies from countries with high religious distance even after the start of the merger process, which reduces the costs of integration.

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