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Stock price firm‐specific information on the choice of stock payment in mergers and acquisitions

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  • Wenjing Ouyang
  • Samuel H. Szewczyk

Abstract

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.

Suggested Citation

  • Wenjing Ouyang & Samuel H. Szewczyk, 2019. "Stock price firm‐specific information on the choice of stock payment in mergers and acquisitions," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(2), pages 1299-1340, June.
    • Handle: RePEc:bla:acctfi:v:59:y:2019:i:2:p:1299-1340
    DOI: 10.1111/acfi.12270
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    Cited by:

    1. Li, Qinyang & Liu, Xiangqiang & Chen, Jing & Wang, Huaixin, 2022. "Does stock market liberalization reduce stock price synchronicity? —Evidence from the Shanghai-Hong Kong Stock Connect," International Review of Economics & Finance, Elsevier, vol. 77(C), pages 25-38.

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