The Relationship between Status and Performance in Cross-border M&As: Evidence from Japanese Firms’ Acquisition Data

Abstract

Despite research over the past three decades, the key factors for success and failure of mergers and acquisitions (M&As) remain poorly understood. Especially cross-border M&As are considered highly emotional event for employees and interfirm conflict can be created by status difference between an acquirer and a target during post-merger integration (PMI). Therefore, this study investigates mechanisms through which status difference (national-status and firm-status) affect M&A performance through analysis of cross-border M&As by Japanese firms. The analysis of 1,371 cross-border acquisitions by Japanese firms from 2001 to 2011 shows that status difference creates interfirm behavioral consensus (leader-follower relationship) avoiding conflict and role ambiguity by information asymmetry; as a result, it affects PMI and performance effectively. This study also emphasizes that the alignment of two firms’ role expectations between status based role and M&A embedded role is important for acquirer’s managers to improve post-merger performance.