Dang, M., Hoang, Viet Anh, Jones, Edward, Henry, Darren, Le, Phuong Uyen and Puwanenthiren, Premkanth 2022. Country uncertainty, power distance, and payment methods in acquisitions. The European Journal of Finance. 28 (16), pp. 1541-1570. https://doi.org/10.1080/1351847x.2021.1971731
| Title | Country uncertainty, power distance, and payment methods in acquisitions |
|---|---|
| Type | Journal article |
| Authors | Dang, M., Hoang, Viet Anh, Jones, Edward, Henry, Darren, Le, Phuong Uyen and Puwanenthiren, Premkanth |
| Abstract | This study examines the impact of country-specific uncertainty on the choice of payment method in international acquisitions. Our results show a negative correlation between the level of target country-specific uncertainty and cash transactions. Specifically, when the host country experiences a high level of country uncertainty, acquirers are more likely to choose non-cash transactions in which acquiring firms can issue their own equity to the target firm as part or all of the purchase consideration of the deal. The result is robust to alternative tests and analysis of subsamples. We also find that differences in uncertainty between host and home countries are informative in bidders’ payment decisions. Further, we find that the negative relation between target country-specific uncertainty and cash payment becomes weaker when there are larger differences in power distance between host and home countries. Our findings provide recommendations for policy-making bodies, and have implications for firm managers making corporate restructuring decisions. |
| Keywords | Country uncertainty, acquisitions, payment methods, institutional environment, power distance |
| Journal | The European Journal of Finance |
| Journal citation | 28 (16), pp. 1541-1570 |
| ISSN | 1351-847X |
| 1466-4364 | |
| Year | 2022 |
| Publisher | Taylor & Francis |
| Publisher's version | License CC BY-NC-ND 4.0 File Access Level Open (open metadata and files) |
| Digital Object Identifier (DOI) | https://doi.org/10.1080/1351847x.2021.1971731 |
| Web address (URL) | https://www.tandfonline.com/doi/full/10.1080/1351847X.2021.1971731 |
| Publication dates | |
| Published online | 06 Sep 2021 |
| Published in print | 2022 |
| Project | 51808392 |
| Funder | Vietnam National Foundation for Science and Technology Development |
| Ministry of Education and Training | |
| License | http://creativecommons.org/licenses/by-nc-nd/4.0/ |
| Page range | 1-30 |