The Choice of Payment Method in European Mergers & Acquisitions

Faccio, Mara; Masulis, Ronald W.

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The Choice of Payment Method in European Mergers & Acquisitions

Journal of Finance, Vol. 60, No. 3, pp. 1345-1388, 2005

58 Pages Posted: 6 Mar 2004 Last revised: 30 Mar 2009

See all articles by Mara Faccio

Mara Faccio

Mitchell E. Daniels, Jr. School of Business, Purdue University; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

University of New South Wales, Sydney; European Corporate Governance Institute (ECGI); Financial Research Network (FIRN); National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER)

Date Written: February 28, 2004

Abstract

We study merger and acquisition (M&A) payment choices of European bidders for publicly and privately held targets in the 1997-2000 period. Europe is an ideal venue for studying the importance of corporate governance in making M&A payment choices, given the large number of closely held firms, and the wide range of capital markets, institutional settings, laws and regulations. The tradeoff between corporate governance concerns and debt financing constraints is found to have a large bearing on the bidder's payment choice. Consistent with earlier evidence, we find that several deal and target characteristics significantly affect the method of payment choice.

Keywords: Corporate finance, Corporate Governance, M&As

JEL Classification: G30, G34

Suggested Citation: Suggested Citation

Faccio, Mara and Masulis, Ronald W., The Choice of Payment Method in European Mergers & Acquisitions (February 28, 2004). Journal of Finance, Vol. 60, No. 3, pp. 1345-1388, 2005, Available at SSRN: https://ssrn.com/abstract=492284