Effects of cultural distance on foreign acquisitions : evidence from italian acquired firms

The present paper aims at analyzing the influence of cultural distance on acquisitions from MNEs of Italian mid-sized firms in terms of the economic performance of target firms. In literature a variety of works has focused on cultural distance as an explicative variable of the results of cross-border acquisitions. Using data from the Mediobanca Research Department Database we analyze Italian midsized firms acquired from MNEs between 1999 and 2009, in order to understand whether or not their performance improved over the post-acquisition period. Using a multidimensional measure of cultural distance, we tested the relationship between cultural distance and target firm's performance in cross-border acquisitions by means of a regression analysis. Our study is the first to examine the impact of cultural distance on post-acquisition performance using the universe of Italian acquired midsized firms. The findings support our hypothesis that cultural distance has a negative effect on post-acquisition performance. [Pub

lisher's Text].