Determinants of the method of payment in mergers and acquisitions

Ahmad Ismail, Andreas Krause

Research output: Contribution to journalArticlepeer-review

24 Citations (SciVal)


We empirically investigate the determinants of the payment form in mergers and acquisitions and introduce new variables on the target and acquirer investment characteristics to evaluate whether the concerns of target and acquirer shareholders are taken into account. Our sample encompasses mergers between publicly listed US companies from 1985 to 2004. Similarly we also consider the determinants of announcement returns using the same set of variables. We establish the relevance of a previously unreported variable for the determination of the payment form, the correlation of returns between target and acquirer, besides the more established determinants hostile takeovers, and defence mechanisms; weak evidence is found for the significance of budget constraints and no evidence for asymmetric information or tax considerations being a relevant factor. We do not find that announcement returns are explained by the variables considered.
Original languageEnglish
Pages (from-to)471-484
JournalThe Quarterly Review of Economics and Finance
Issue number4
Publication statusPublished - Nov 2010


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