Religion, risk aversion, and cross border mergers and acquisitions
Date of Original Version
We study the relation between religiosity (a measure of the strength of a country's religious belief) and cross-border mergers and acquisitions. We find that acquirers from more religious countries conduct fewer and smaller cross-border merger transactions and, when they do, they pay less, and a smaller proportion of their payment is in the form of cash (as opposed to stock). Having a greater proportion paid by stock effectively binds targets to the acquirer's post-merger risks. Our results suggest that a country's religiosity may closely proxy the aversion to risk of its companies’ directors and executives. We also show (with a few minor exceptions) that a country's primary religion such as Catholicism, Protestantism, and Buddhism, tends not to have a bearing on the cross-border merger transactions, method of payment, or premium, after accounting for the degree of religiosity.
Journal of International Financial Markets, Institutions and Money
Maung, Min, Zhenyang Tang, Craig Wilson, and Xiaowei Xu. "Religion, risk aversion, and cross border mergers and acquisitions." Journal of International Financial Markets, Institutions and Money 70, (2021). doi:10.1016/j.intfin.2020.101262.