Determinants of payment method in cross-border mergers and acquisitions.
Tan, Iris Sze Yun.
Tay, Ying Shen.
Date of Issue2006
College of Business (Nanyang Business School)
This paper aims to pioneer the investigation of payment method determinants unique to cross-border Merger and Acquisition transactions. First, we extend the existing literature to a sample of 469 cross-border deals over the period 2001-2005. We find strong evidence that the existing hypotheses still apply in an international context. More importantly, we propose and test additional cross-border considerations in order to generate a better understanding of method of payment motivations specific to international deals. While exchange-rate volatility did not appear to affect the choice of payment method, we find strong evidence that stock payment is more likely when both parties are listed on a common stock exchange. The further application of a stock-market development variable showed that target shareholders consider transaction costs in their decision to accept stock payment from a foreign acquirer. Lastly, we find that acquirers from more liquid stock markets possess stock which is viewed as a more attractive payment method in cross-border transactions.
DRNTU::Business::Finance::Mergers and acquisitions
Final Year Project (FYP)
Nanyang Technological University