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Firm location and the method of payment in mergers and acquisitions

Firm location and the method of payment in mergers and acquisitions
Firm location and the method of payment in mergers and acquisitions
This article examines the impact of a bidding firm’s geographical location on the choice of method of payment in mergers and acquisitions. We find that rural bidders are more likely to offer pure stock deals and have lower propensity to use cash as the method of payment compared to their nonrural counterparts. Such findings are possibly attributable to recent empirical evidence which finds that rural firms face higher costs of debt and have limited access to soft information that can help in determining the true value of target firms.
1350-4851
317-324
Koutmos, Dimitrios
542bf98b-f0bb-4072-bc2e-9806f6ca0599
Song, Wei
0d91b8a3-694b-469e-a15e-bba82dc5d090
Zhou, Si
4d888ef9-73bb-4fde-969e-5003c5c0b146
Koutmos, Dimitrios
542bf98b-f0bb-4072-bc2e-9806f6ca0599
Song, Wei
0d91b8a3-694b-469e-a15e-bba82dc5d090
Zhou, Si
4d888ef9-73bb-4fde-969e-5003c5c0b146

Koutmos, Dimitrios, Song, Wei and Zhou, Si (2014) Firm location and the method of payment in mergers and acquisitions. Applied Economics Letters, 21 (5), 317-324. (doi:10.1080/13504851.2013.859365).

Record type: Article

Abstract

This article examines the impact of a bidding firm’s geographical location on the choice of method of payment in mergers and acquisitions. We find that rural bidders are more likely to offer pure stock deals and have lower propensity to use cash as the method of payment compared to their nonrural counterparts. Such findings are possibly attributable to recent empirical evidence which finds that rural firms face higher costs of debt and have limited access to soft information that can help in determining the true value of target firms.

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e-pub ahead of print date: 7 January 2014
Published date: 7 January 2014
Organisations: Centre for Digital, Interactive & Data Driven Marketing

Identifiers

Local EPrints ID: 368508
URI: http://eprints.soton.ac.uk/id/eprint/368508
ISSN: 1350-4851
PURE UUID: 03514201-e1a2-42ae-9900-b298e820cf4a

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Date deposited: 09 Sep 2014 10:41
Last modified: 26 Apr 2022 17:23

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Contributors

Author: Dimitrios Koutmos
Author: Wei Song
Author: Si Zhou

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