Browsing by Author "Petersen, Julius Michael"
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- Does payment method matter in european cross-border M&A?Publication . Petersen, Julius Michael; Di Giuli, AlbertaWhile financial markets in general react more positively to cash financed acquisitions, academic literature suggests that stock financing has certain advantages for acquiring firm shareholders in the subset of cross-border M&A. The reasoning for this is that cross-border M&A deals are associated with specific risk factors that an acquisition via stock financing can potentially mitigate. However, it is unclear whether this also holds true for the intra-European market for corporate control. This question is analyzed in the scope of this dissertation by conducting an event study on 1,184 M&A deals that took place between 01/01/2008 and 31/12/2018 where both the target and acquirer are headquartered in Europe. The obtained results show that stock financed cross-border deals culminate in significantly higher acquirer CARs than cash financed ones. In order to further investigate potential explanations for this pattern, additional tests on geographical and cultural distance as well as on differences in the corporate governance framework between target and acquirer nations were run. The findings indicate that financial markets view stock financing of M&A deals as an efficient way to mitigate information asymmetry and post-acquisition monitoring issues that stem from cultural and geographical distance. Opposingly, no evidence is found that post-acquisition monitoring issues related to relatively weak corporate governance frameworks in target firm nations can be mitigated by stock financing.