The effect of financing costs on the payment method in European M&A

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Beschreibung

This thesis aims to determine to what extend financing costs influence the payment method of mergers & acquisitions (M&A) in Europe. This study contributes to the literature by examining how macro-economic factors impact the payment method in M&A. Evidence indicates that lower interest rates stimulate cash payments in M&A financing decisions. Furthermore, the cost of equity relative to debt decreases when the economy grows, resulting in a preference for stock payment when GDP growth rate increases. In cross-border (foreign) acquisitions the interest rates seem to have less effect on cash payments. For GDP growth rate the negative correlation becomes stronger, indicating the likelihood of cash payments decrease further in cross-border M&A. When economies grow the investment opportunities decrease, forcing companies to look for riskier foreign investment opportunities. Hence, decrease the preference to pay with cash in M&A. The results show that differences in the costs of capital caused by both micro- and macro-level factors create a preference ranking over financing sources. This indicates the pecking order theory is also applicable to the payment method in M&A.

Autorentext

Steven Bauer is a MSc graduate of Vrije University Amsterdam (2016). He studied Financial Management where he took classes in both Corporate Finance & Corporate Valuation.

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Produktinformationen

Titel
The effect of financing costs on the payment method in European M&A
Untertitel
A research exploring the effects of macro-economic factors
Autor
EAN
9783330048690
ISBN
978-3-330-04869-0
Format
Kartonierter Einband
Herausgeber
LAP Lambert Academic Publishing
Genre
Wirtschaft
Anzahl Seiten
56
Gewicht
g
Größe
H220mm x B220mm x T150mm
Jahr
2017
Untertitel
Englisch
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