Acquisition Finance: Are European Companies Different?

40 Pages Posted: 29 Jun 2016

See all articles by Virginie Mataigne

Virginie Mataigne

Ghent University-Universiteit Gent - Department of Accountancy and Corporate Finance

Theo Vermaelen

INSEAD - Finance

Date Written: June 28, 2016

Abstract

The authors follow the methodology of a U.S.-based study to compare determinants of the financing choices of European and American acquirers. Differences in bank dependence and ownership concentration between Europe and the U.S. are potentially important for the financing decision.

The authors' results indicate that information asymmetry and corporate control issues explain the high incidence of payment using cash rather than stock in Europe. In contrast to their U.S. counterparts, European acquirers do not use acquisition finance to get closer to their optimal capital structure. They also time the market by paying with stock when shares are overvalued.

Suggested Citation

Mataigne, Virginie and Vermaelen, Theo, Acquisition Finance: Are European Companies Different? (June 28, 2016). INSEAD Working Paper No. 2016/43/FIN. Available at SSRN: https://ssrn.com/abstract=2801466 or http://dx.doi.org/10.2139/ssrn.2801466

Virginie Mataigne

Ghent University-Universiteit Gent - Department of Accountancy and Corporate Finance ( email )

Bedrijfsfinanciering (RUG)
Kuiperskaai 55 E
Ghent, B-9000
Belgium

Theo Vermaelen (Contact Author)

INSEAD - Finance ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
France
33 1 60 72 42 63 (Phone)
33 1 60 72 40 45 (Fax)

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