Does distance produce beauty or estrangement? A meta-analysis review on the relationship between cross-national distance and cross-border M&A performance
【Abstract】How to improve the performance of cross-border M&As has been an important research topic in the field of international business. Scholars find that one key explanatory variable for cross-border M&A performance relates to cross-national distance, namely, the distance between an acquirer’s home country and its host country. Existing literature has extensively studied the influence of cross-national distance on cross-border M&A performance and tried to discover whether and how distances affect completions of M&A events, stock market reactions to event announcements and long-term post-M&A performance. However, empirical findings on the above relationship remain inconclusive. For instance, some scholars draw arguments from the institutional theory and propose that cross-national distance creates additional transaction costs and has a negative impact on cross-border M&A performance; some scholars rely on the knowledge-based view and suggest that cross-national distance helps acquirers access complementary resources and technological skills, thus improving cross-border M&A performance; and others apply the theory of information asymmetry to contend that extreme remoteness or proximity between two nations lead to poor cross-border M&A performance. Therefore, the answer to the question of how cross-national distance affects cross-border M&A performance remains unclear. This study attempts to use the meta-analysis method to make a comprehensive comparative analysis of the previous studies and verify the relationship between cross-national distance (including cultural distance, institutional distance, geographic distance and economic distance) and the performance of cross-border M&As (including market returns at announcements, M&A completed or not, and long-term performance). In addition, this study takes the directionality and temporality of cross-national distance into consideration and treats them as two contextual moderators. To ensure the completeness and accuracy of the literature collected, this study conducts a rigorous and thorough literature search. Relevant literature comes from two major academic databases—China National Knowledge Infrastructure (CNKI) and Web of Science—and must meet the methodological requirements of meta-analysis. Eventually, this study selects 44 independent papers and conducts subsequent coding, measurement and statistical analysis by utilizing the Comprehensive Meta-analysis Software (CMA). Meta-analysis findings show a negative relationship between cross-national distance and cross-border M&A performance. In addition, the degree of the home country’s economic development and the sampling period have significant moderating effects: when an acquirer comes from an emerging market, or when a sampling period is before 2008, the negative relationship between cross-national distance and cross-border M&A performance will be more prominent. Drawing upon the insights from the meta-analysis findings, this study identifies three directions for future research by considering industry- and firm-level distance, multiple dimensions of distance, and the directionality of distance.