Impact of industry characteristics on the method of payment in mergers

García‐Feijóo, Luis; Madura, Jeff; Ngo, Thanh

doi:10.1016/j.jeconbus.2012.03.003

Cited by 18 publications

(5 citation statements)

References 39 publications

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“…According to (García-Feijóo et al 2012), the methods of payment for mergers and acquisitions vary significantly among industries and across time. From this perspective, this paper explores the importance of the means of exchange in the travel and tourism industries.…”

Section: Discussionmentioning

confidence: 99%

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The Medium of Exchange in Mergers and Acquisitions: The Cases of Travel Agencies and Tour Operators

Coelho

Girón

2020

Administrative Sciences

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The choice of the means of exchange is one of the critical decisions in mergers and acquisitions. Travel agencies and tour operating-industries compete in a volatile environment, and in addition to generating economies of scale, investments in the industry involve important sunk costs. This paper’s focus is on the determinants of the medium of exchange in mergers and acquisitions in the travel and tour-operating industries. Previous research on the ‘law and finance’ perspectives argues that some country of origin legal systems offer better investment protection to investors. Accordingly, civil law-based systems offer weaker protection to investors when compared to common-law-based systems. For this purpose, we use a logistics regression to model the determinants of cash in a sample of 750 mergers and acquisitions by combining the research streams above. Our results provide evidence of the relationship between investor protection and the use of cash.

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Section: Discussionmentioning

confidence: 99%

“…An acquirer must determine the means of exchange related to the offer on a merger and acquisition deal, that is, whether the payment will be in the form of cash, debt, equity, or a mixed offer. Those trade-offs can vary across industries (García-Feijóo et al 2012).…”

Section: The Transactions Happen In a Context Of Imperfect Informationmentioning

confidence: 99%

The Medium of Exchange in Mergers and Acquisitions: The Cases of Travel Agencies and Tour Operators

Coelho

Girón

2020

Administrative Sciences

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“…In the B2B market, the choice of cash is more attractive for the acquirers. This is because the cost of equity increases relative to the cost of debt, and business partners gain better value through upstream value-chain improvement (García-Feijóo et al, 2012). The cost of external financing increases if imperfections in the capital market generate financing frictions by reducing the negotiating power of the business partners (Kohtamäki & Rajala, 2016;O'Cass & Ngo, 2012).…”

Section: Capital Structurementioning

confidence: 99%

“…The macroeconomic environment and industry effects significantly influence the choice of payment methods for M&A deals (García-Feijóo et al, 2012). Therefore, to discern the different effects of the two major forms of financing M&A deals during the financial crisis, a Financial Stress Index (FSI) is constructed in line with Illing & Liu (2006).…”

Section: Financial Stress Index (Fsi) Datamentioning

confidence: 99%

Payment choice of M&As: Financial crisis and social innovation

Kanungo

2021

Industrial Marketing Management

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“…Besides, in choosing a target firm and planning method of payment, acquirers consider current variation from their target leverage (Harford et al, 2009;Uysal, 2011). García-Feijóo et al (2012) show that method of payment is affected by industry structure. Moreover, empirical studies suggest that stock payments are more common during high stock valuation periods (Jovanovic and Rousseau, 2001;Maksimovic and Phillips, 2001).…”

Section: Holmstrom and Kaplan (2001) Point Out That Leveraged Takeovementioning

confidence: 99%

Sources of Value in Mergers and Acquisitions

Yaghoubi

2013

SSRN Journal

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This paper discusses sources of value in acquisitions. Using the discounted cash-flow valuation method, we develop a model that explains sources of economic gains that can be attained through mergers. The model identifies three major sources of value in mergers, each of which can reduce or contribute to the combined wealth effect of a takeover deal. The overall value of the deal is a sum of the impacts of these factors on the combined value. The main contribution of this study is to highlight the role of the difference between the combined firm's weighted average cost of capital and that of the acquirer and the target in value creation through mergers. The model suggests that this difference, along with the operating synergies, can explain total value effects of mergers.JEL classification: G34

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Impact of industry characteristics on the method of payment in mergers

Cited by 18 publications

References 39 publications

The Medium of Exchange in Mergers and Acquisitions: The Cases of Travel Agencies and Tour Operators

The Medium of Exchange in Mergers and Acquisitions: The Cases of Travel Agencies and Tour Operators

Payment choice of M&As: Financial crisis and social innovation

Sources of Value in Mergers and Acquisitions

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