Please use this identifier to cite or link to this item: https://repository.iimb.ac.in/handle/2074/13909
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dc.contributor.authorBhalla, Manaswini
dc.contributor.authorGoel, Manisha
dc.contributor.authorKonduri, V S K Teja
dc.contributor.authorZemel, Michelle
dc.date.accessioned2020-08-18T15:15:50Z-
dc.date.available2020-08-18T15:15:50Z-
dc.date.issued2018
dc.identifier.urihttps://repository.iimb.ac.in/handle/2074/13909-
dc.description.abstractWe show that cultural proximity between two firms’ boards leads to a higher likelihood of the two firms entering a merger and acquisition (M&A) deal in India. This phenomenon may indicate firms’ reliance on culture, as measured by caste, as an informal channel of information when making critical investment decisions with imperfect information. However, it may also be driven by familiarity bias leading to sub-optimal investments. Indeed, caste-proximate M&A deals are value destroying for both acquirer and target, as well as the merged entity. There is also no transfer of value from acquirers to targets, and no significant reduction in time to completion, indicating that potential trust among directors with similar caste identities does not benefit the negotiation process. Overall, our findings show that familiarity bias in favor of culturally proximate agents can lead to sub-optimal investment decisions
dc.publisherUniversity of Chicago
dc.subjectInvestment
dc.subjectInformation
dc.subjectMergers and acquisitions
dc.subjectCorporate governance
dc.subjectCultural economics
dc.titleFirms of a feather merge together: Information flows, familiarity bias and M&A outcomes
dc.typePresentation
dc.relation.conferenceChicago Booth-India Quantitative Marketing Conference: 17th December, 2018, IIM Bangalore
dc.pages52p.
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