The Relevance of Language and Linguistic Features to Cross-Border M&As

Date

2023

Authors

Zhang, Yangfan Zoe

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Abstract

This thesis investigates the impact of linguistic differences between targets and acquirers on the likelihood of completing cross-border M&As and acquirers' long-term post-acquisition performance. To examine potential language impacts, it tests language difference and distance based on the locations in the language tree and differences in three linguistic features in the primary languages of targets and acquirers; the strength of future time reference (FTR), the presence of a sex-based gender marking system (SB), and the use of politeness distinctions in pronoun use (PD). Language and linguistic features have been claimed to influence and perpetuate firms' dominant logics of doing business. The three linguistic features have been used in prior studies to predict individual or organisational economic behaviours, suggesting they have potential implications for cross-border M&A decisions. The differences in languages and linguistic features between targets and acquirers are theorised to give rise to difficulties in aligning corporate dominant logics, cooperation, and communication between the two parties during pre-acquisition negotiation through to post-acquisition integration and cooperation. The results indicate that differences in language between targets and acquirers are negatively associated with both the likelihood of completing announced cross-border M&As and post-acquisition long-term performance. The influence of differences in linguistic features on both completion and performance of cross-border M&As varies according to acquirers' linguistic attributes. The findings are robust to the use of different measurements and estimation methods, and after controlling for main and moderating effects of differences in acquirers' and targets' attributed national cultural traits, showing that the effects of language and linguistic differences are additional to the cultural effects that have been more widely investigated in prior studies. Further analyses show that the presence of linguistic differences also influence the time taken to complete cross-border M&A deals and post-acquisition performance using differing horizons. This thesis adds to research on cross-border acquisitions by empirically approaching post-acquisition alignment of ways of doing business between targets and acquirers through objectively observed linguistic features. It also provides further evidence to validate the economic implications of the three linguistic features, by investigating the interactions of their embedded dominant logic between organisations.

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Thesis (PhD)

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DOI

10.25911/S2YW-EA93

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