Takeover Regulations and the Medium of Exchange

Korapun Sumetsittikul

Abstract


This paper examine the determinants that affect payment method decisions in mergers and acquisitions in the aspect of takeover regulation differences between US and UK. The two hypotheses are tested: first, whether the likelihood of stock financing is high, when the level of target-side uncertainty is high in US deals; second, the relation predicted for US deal is less pronounced for transactions involving UK target. The findings are as follows. In US, when the extent of target-side uncertainty is high, the probability of stock acquisitions is larger. In UK, the evidence is weaker, which lends support to the predicion; this is because target shareholders in UK deals are allow to choose the medium of exchange. In summary, the takeover regulation does affect payment method decisions.


Keywords


Takeover regulation; Merger and acquisition / Determinant; The medium of exchange; Uncertainty; The United States; The United Kingdom

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References


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