Cultural tightness-looseness and inter-regional mergers and acquisitions: Evidence from China

We investigated the role of culture in inter-regional mergers and acquisitions (M&As) within national borders, using a dataset that includes M&As conducted by Chinese listed firms from 2005 to 2019. Our research provides compelling evidence that the likelihood of an acquirer initiating a merger proposal - and the subsequent probability of reaching an agreement - decreases as the cultural tightness gap between the acquiring and target firms widens. Furthermore, we found that this negative impact of cultural tightness distance is more pronounced in non-state-owned firms and firms led by younger CEOs.