Family ownership and M&amp;A payment method

Teti, Emanuele; Dallocchio, Maurizio; Currao, Tancredi

doi:10.1002/ijfe.2255

Cited by 4 publications

(2 citation statements)

References 72 publications

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“…Alternatively, when family firms are acquirers, their valuation decisions are similar to non‐family firms or they pay slightly less (Haider et al, 2020; Leitterstorf and Wachter, 2016; Sraer and Thesmar, 2007; Thraya and Hamza, 2019). However, family firms are more likely to pay for assets with cash to preserve socioemotional wealth (Haider et al, 2020; Teti et al, 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

Family Business Restructuring: A Review and Research Agenda

King

Meglio

Gómez‐Mejía

et al. 2021

J Management Studies

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Although business restructuring occurs frequently and it is important for the prosperity of family firms across generations, research on family firms has largely evolved separately from research on business restructuring. This is a missed opportunity, since the two domains are complementary, and understanding the context, process, content, and outcome dimensions is relevant to both research streams. We address this by examining the intersection between research on business restructuring and family firms to improve our knowledge of each area and inform future research. To achieve this goal, we review and organize research across different dimensions to create an integrative framework. Building on current research, we focus on 88 studies at the intersection of family firm and business restructuring research to develop a model that identifies research needs and suggests directions for future research.

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Section: Literature Reviewmentioning

confidence: 99%

Family Business Restructuring: A Review and Research Agenda

King

Meglio

Gómez‐Mejía

et al. 2021

J Management Studies

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show abstract

“…Prior research has identified method of payment decisions to be related to bidding company attributes including size, agency and governance environment, valuation, capital structure and ownership with cash more likely to be used as the acquisition method of payment if bidders are larger and have stronger governance structures, undervalued stock, greater financing flexibility, higher equity costs, and more concentrated and family ownership structures (Martin 1996;Rhodes-Kropf and Viswanathan 2004;Rossi and Volpin 2004;Faccio and Masulis 2005;Basu, Dimitrova, and Paeglis 2009;Martynova and Renneboog 2009;Teti, Dallocchio, and Currao 2020). Attributes of targets which are correlated with method of payment choice include firm size and relative target to bidder size, underlying risk and listing status (Chang 1998;Faccio, McConnell, and Stolin 2006;Capron and Shen 2007;Officer, Poulsen, and Stegemoller 2009;Boone, Lie, and Liu 2014;Huang, Officer, and Powell 2016) and acquisition-specific determinants of method of payment choice that have been identified include acquisition size, full or partial bid structure, bidder toeholds, and the industry match between bidding and target firms.…”

Section: Methods Of Payment Determinantsmentioning

confidence: 99%

Country uncertainty, power distance, and payment methods in acquisitions

Dang

Hoang

Jones

et al. 2021

The European Journal of Finance

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This study examines the impact of country-specific uncertainty on the choice of payment method in international acquisitions. Our results show a negative association 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 of bidders' payment choices. Further, we find that the negative relation between target countryspecific uncertainty and cash payment weakens 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.

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CEO risk preference and M&A payment method: considering the non-economic factors

Guo,

Cheng

2024

IJOEM

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PurposeThe authors investigate the effects of Chinese acquirer’s chief executive officer (CEO) risk preference on mergers and acquisitions (M&A) payment method and the moderating roles played by acquirer’s ownership, industry relatedness and whether the M&A is cross-border.Design/methodology/approachUsing 4,624 worldwide M&A deals conducted by Chinese firms from 2009 to 2021, the authors conduct multiple linear regression and ordered probit regression. And comprehensive indexes constructed based on the observed features of acquirer’s CEOs are used to be the proxy for CEO risk preference.FindingsThe results show that the higher-level Chinese acquirer’s CEO risk preference is overall positively associated with using more stock in payment. Moreover, the above relationship is strengthened if the ownership of the acquirer is state-owned.Originality/valueThe authors highlight the importance of the non-economic factors and demonstrate a relationship between the Chinese acquirer’s CEO risk preference and the M&A payment method, providing support for and enriching the upper echelons theory (UET). Moreover, the unique risk priorities of Chinese acquirers’ CEOs are revealed.

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Family ownership and M&A payment method

Cited by 4 publications

References 72 publications

Family Business Restructuring: A Review and Research Agenda

Family Business Restructuring: A Review and Research Agenda

Country uncertainty, power distance, and payment methods in acquisitions

CEO risk preference and M&A payment method: considering the non-economic factors

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