Cross-border M&A, Payment Method, and Acquirer Returns

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School of Business | Bachelor's thesis
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Date

2023

Department

Rahoituksen laitos

Major/Subject

Mcode

Degree programme

Rahoitus

Language

en

Pages

32 + 5

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Abstract

This bachelor’s thesis examines the effect of payment methods on acquirer returns in cross-border mergers and acquisitions, as well as the differences in acquirer returns between cross-border and domestic acquisitions. Focusing on Nordic M&As from 2010 to 2022, the sample includes 1667 transactions, of which 807 are domestic and 860 are cross-border deals. My findings reveal that the shareholders of Nordic acquirers experience significantly lower returns in cross-border M&As compared to domestic ones, with a difference of -1.125%. However, when adjusting for deal and company characteristics, this negative effect vanishes, suggesting that this effect is largely explained by other deal and company characteristics. Additionally, stock-financed deals yield significantly higher returns than cash-financed deals in cross-border transactions with a difference of 4.652%. This effect holds even after controlling for company and deal characteristics. Furthermore, I find that stock payment is the preferred payment method over cash payment when the target is located in a country with weaker shareholder protection.

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Thesis advisor

Luotonen, Niilo

Keywords

mergers and acquisitions, diversification, payment method, acquirer returns

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https://urn.fi/URN:NBN:fi:aalto-202404072998

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[kand] Kauppakorkeakoulu / BIZ