The relevance of accounting standards differences for the post-acquisition performance of cross-border mergers and acquisitions

Abstract

This paper examines whether accounting standards differences across countries influence the post-acquisition performance of cross-border mergers and acquisitions (M&A). Extending the existing literature, this study argues that accounting standards differences between the acquirer and target negatively impact the due diligence process, while a careful and thorough due diligence process is considered as the foundation of good acquisition performance. Therefore, a negative relation between accounting standards differences and post-acquisition performance of cross-border M&As is predicted. This paper also investigates whether acquisition premium has a moderating impact on the relation between accounting standards differences across countries and post-acquisition performance of cross-border M&As. Using a sample of 426 cross-border M&As, results show that in cross-border M&As, neither the differences in accounting standards between acquirers’ and targets’ countries, nor their interaction with acquisition premiums are factors predicting the post-acquisition performance. This study contributes to the literature that looks at the post-acquisition performance of crossborder acquisitions, providing evidence that accounting standards differences do not matter in predicting the performance, probably because the acquirer does not rely just on the publicly available financial information. Show more