The Choice of Stock Over Cash Payments in Mergers and Acquisitions: A Market‐Failure Account and Empirical Evidence

Author:

Tseng Chiung‐Hui1ORCID,Chen Shih‐Fen S.2ORCID

Affiliation:

1. Institute of International Business, College of Management National Cheng Kung University Tainan Taiwan

2. College of Business and Economics Western Washington University Bellingham Washington USA

Abstract

AbstractPayments in mergers and acquisitions (M&As) can be all cash, all stock, or any combination of the two. However, using stock instead of cash in M&A payments has clear weaknesses that must be offset (e.g., valuation difficulty). In this study, we argue that stock payments can save on the costs of using the M&A market, which serves to compensate the inherent weaknesses of stock deals. Our empirical findings confirm that stock should account for a greater percentage of the payment in M&As that feature higher transaction costs. The market‐failure account for stock payments that we offer contributes to the M&A literatures in both finance and management.

Publisher

Wiley

Subject

Management of Technology and Innovation,Marketing,Public Administration,Business and International Management

Cited by 1 articles. 订阅此论文施引文献 订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献

1. CEO risk preference and M&A payment method: considering the non-economic factors;International Journal of Emerging Markets;2024-02-08

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