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Mergers, Method of Payment and Returns to Manager- and Owner-Controlled Firms

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  • Blackburn, Virginia L
  • Dark, Frederick H
  • Hanson, Robert C

Abstract

Previous work provides evidence of disparate consequences for acquiring firms initiating stock and cash merger exchanges. These studies show that the choice of payment method and the subsequent consequences may be a result of dissimilar motivations. This paper addresses the role of corporate control by examining the consequences of stock, cash and mixed exchanges to manager- and owner-controlled firms. Particular attention is paid to mixed exchanges as a test of the total consequences of acquisition activity. The results indicate that the market valuation of the acquiring firm's stock is related to both the method of payment and the acquiring firm control structure. Copyright 1997 by MIT Press.

Suggested Citation

  • Blackburn, Virginia L & Dark, Frederick H & Hanson, Robert C, 1997. "Mergers, Method of Payment and Returns to Manager- and Owner-Controlled Firms," The Financial Review, Eastern Finance Association, vol. 32(3), pages 569-589, August.
    • Handle: RePEc:bla:finrev:v:32:y:1997:i:3:p:569-89
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    Cited by:

    1. David R. King & Gang Wang & Mehdi Samimi & Andres Felipe Cortes, 2021. "A Meta‐Analytic Integration of Acquisition Performance Prediction," Journal of Management Studies, Wiley Blackwell, vol. 58(5), pages 1198-1236, July.
    2. Raymond da Silva Rosa & Robin Limmack & Supriadi & David Woodliff, 2004. "The Equity Wealth Effects of Method of Payment in Takeover Bids for Privately Held Firms," Australian Journal of Management, Australian School of Business, vol. 29(1_suppl), pages 93-110, June.
    3. Raymond Silva Da Rosa & H. Y. Izan & Adam Steinbeck & Terry Walter, 2000. "The Method of Payment Decision in Australian Takeovers: An Investigation of Causes and Effects," Australian Journal of Management, Australian School of Business, vol. 25(1), pages 67-94, June.
    4. Ismail, Ahmad & Krause, Andreas, 2010. "Determinants of the method of payment in mergers and acquisitions," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(4), pages 471-484, November.
    5. Reena Kohli, 2013. "Earnouts A Risk Mitigating Strategy For Cross Border Acquisitions In India," Working papers 119, Indian Institute of Management Kozhikode.

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