Beyond Culture: How does international migration affect cross-border mergers and acquisitions?

Beyond Culture: How does international migration affect cross-border mergers and acquisitions?

Authors

Ning Gong

Deakin University

Micah S. Officer

Loyola Marymount University - Department of Finance

Hong Feng Zhang

Deakin University - Deakin Business School

Abstract

We show that a higher migrant stock from an acquiring country to a target country leads to greater deal frequency and dollar value in cross-border acquisitions after controlling for the differences in economic and financial development, regulatory environments, valuations, and cultural distance. Our results support the arguments that migration impacts cross-border deal activity by ameliorating the effect of cultural distance, facilitating post-merger integration, and mitigating information asymmetry between acquiring and target countries. Instrumental variables derived from the interactions of the push and pull factors of migrant flows mitigate endogeneity concerns in our study.