Corporate culture and M&A deals: Using text from crowdsourced employer reviews to measure cultural differences
Abstract
In this study, we collect a large sample of crowdsourced employer reviews from acquirer- target pairs that were involved in domestic M&A deals in the US. We train a topic model that learns how employees describe corporate culture in free-response texts to examine differences in corporate culture on the organizational level. We document a strong and statistically significant U-shaped relationship between cultural differences and deal an- nouncement returns that appears to reconcile two long-standing but competing hypothe- ses on the role of cultural differences in M&A deals. Further analyses suggest that more narrow cultural frameworks may neglect cultural dimensions that are relevant to assess deal success.