Klitzka, Michael ; He, Jianan ; Schiereck, Dirk (2021)
The rationality of M&A targets in the choice of payment methods.
In: Review of Managerial Science, 16 (4)
doi: 10.1007/s11846-021-00469-6
Article, Bibliographie
This is the latest version of this item.
Abstract
This study analyzes mergers and acquisitions (M&A) payment methods in large transactions of public U.S. acquirers between 2009 and 2016. While we find consistent with previous evidence that asymmetric information between acquirers and targets significantly influences the choice of M&A payment methods, we show that contrary to prevailing findings in the literature, acquirers cannot exploit their overvaluation through stock-financed M&A at targets’ disadvantage. In addition, when facing larger uncertainty in the counterparty’s valuation, a higher ratio of cash is applied in M&A payment. Our results document that both acquirers and targets are rational in choosing M&A payment methods.
| Item Type: | Article |
|---|---|
| Erschienen: | 2021 |
| Creators: | Klitzka, Michael ; He, Jianan ; Schiereck, Dirk |
| Type of entry: | Bibliographie |
| Title: | The rationality of M&A targets in the choice of payment methods |
| Language: | English |
| Date: | 2021 |
| Place of Publication: | Berlin ; Heidelberg |
| Publisher: | Springer |
| Journal or Publication Title: | Review of Managerial Science |
| Volume of the journal: | 16 |
| Issue Number: | 4 |
| DOI: | 10.1007/s11846-021-00469-6 |
| URL / URN: | https://link.springer.com/article/10.1007/s11846-021-00469-6 |
| Corresponding Links: | |
| Abstract: | This study analyzes mergers and acquisitions (M&A) payment methods in large transactions of public U.S. acquirers between 2009 and 2016. While we find consistent with previous evidence that asymmetric information between acquirers and targets significantly influences the choice of M&A payment methods, we show that contrary to prevailing findings in the literature, acquirers cannot exploit their overvaluation through stock-financed M&A at targets’ disadvantage. In addition, when facing larger uncertainty in the counterparty’s valuation, a higher ratio of cash is applied in M&A payment. Our results document that both acquirers and targets are rational in choosing M&A payment methods. |
| Uncontrolled Keywords: | Mergers and acquisitions (M&A), Choice of payment methods, Rational payment design, Equity overvaluation and misvaluation, Information asymmetry |
| Additional Information: | JEL Classification: G14 Mathematics Subject Classification: 91G50 Corporate finance (dividends, real options, etc.) |
| Divisions: | 01 Department of Law and Economics 01 Department of Law and Economics > Betriebswirtschaftliche Fachgebiete 01 Department of Law and Economics > Betriebswirtschaftliche Fachgebiete > Corporate finance |
| Date Deposited: | 14 Oct 2021 15:23 |
| Last Modified: | 19 Jul 2024 07:44 |
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The rationality of M&A targets in the choice of payment methods. (deposited 02 Apr 2024 11:28)
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