The Determinants of the Method of Payment in Mergers and Acquisitions in Emerging Capital Markets

Abstract

Authors: Svetlana A. Grigorieva National Research University The Higher School of Economics grigorievasa@mail.ru

Н V Fomenko

The impact of mergers and acquisitions on company value is the topic for debate in financial academic literature for a long time. One of the major considerations in any M&A transaction that influence the performance of mergers and acquisitions is the method of payment. Based on the sample of 825 deals in BRICS countries that occur between 1999-2009 we find that motives underlying the method of payment in M&A deals are: acquirer’s cash availability, deal size, the percentage ownership of institutional shareholders in bidder’s equity, the dynamic of bidder’s market to book ratio, the acquired and already owned share of target company at the announcement date.