Premium
Stock price firm‐specific information on the choice of stock payment in mergers and acquisitions
Author(s) -
Ouyang Wenjing,
Szewczyk Samuel H.
Publication year - 2019
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12270
Subject(s) - business , mergers and acquisitions , stock (firearms) , payment , restricted stock , shareholder , private information retrieval , stock price , market maker , monetary economics , finance , financial economics , economics , stock market , corporate governance , mechanical engineering , paleontology , statistics , mathematics , horse , series (stratigraphy) , engineering , biology
Previous studies on the choice of stock payment in M&A mainly focus on managerial private information. This study shows that managers also learn new firm‐specific information from financial markets in making this decision. The acquirer's stock price firm‐specific information increases the stock‐payment‐to‐Q sensitivity. The target's stock price firm‐specific information decreases the stock payment probability. Further analyses on deal and firm characteristics as well as shareholder wealth in stock mergers support the managerial learning argument. Overall, this study highlights a new set of information that affects the form of merger payment in mergers and acquisitions.