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This paper explores how language and religion influence cross-border acquisition completion in the negotiation phase of acquisition. The frequency and intensity of communication in the negotiation phase of acquisition will be high. We believe that language and religion will have an important impact in this phase. We have focused not only on cross-national differences but also on diversity within the target country. Our analysis based on foreign acquisitions across 55 acquirer and 54 target countries shows that both linguistic distance and religious distance are negatively related to the probability of acquisition completion. We find that both linguistic diversity and religious diversity are negatively related to the probability of acquisition completion. Moreover, a good institutional environment in the target country may reduce the information asymmetry and transaction cost in the process of cross-border acquisition. In this case, the influence of language and religion will weaken.
Li et al. (2020) studied this question.