Cultural and Geographical Dynamics in Healthcare Mergers & Acquisitions: An Empirical Investigation of the Effects of Geographical and Cultural Distance on the Short-term Value Creation on Cross-border Mergers and Acquisitions in the Healthcare Industry

Abstract

The acceleration of mergers and acquisitions in the healthcare industry has seen increasingly valuable deals across international borders, led by a need to fill patent pipelines, obtain innovative new products, and expand global portfolios. This thesis investigates the influence of geographical and cultural distances on the short-term value creation of cross-border mergers and acquisitions from 2000 to 2020. Current literature reveals a lack of consensus regarding the short-term value creation for cross-border deals and overlooks industry specific investigation of the healthcare industry. This thesis aims to fill this gap by studying 1,753 healthcare deals, including both domestic and cross-border transactions, and their associated announcement effects. Contrary to expectations, the analysis reveals: (1) no significant disparity in short-term value creation between cross-border and domestic deals, and (2) that cultural and geographical distances do not affect the outcomes of cross-border deals. These findings challenge prevailing academic perspectives and suggest that the cross-border nature and associated cultural differences may not be as impactful on deal success as previously thought. This study contributes to the ongoing discourse in mergers and acquisitions, offering new insights into the complex interplay of factors that influence deal outcomes in the global healthcare market.