A Study Of Determinants Of The Choice Of Payment Method In Mergers & Acquisitions Launched By Listed Companies

Mergers and acquisitions (M&A) transactions are becoming more and more popular all over the world. And obviously, M&A have played an important role in optimization of resources allocation and expansion of companies. How to choose the best method of payment for M&A is a common difficulty faced by all the acquiring companies. The rapid development of worldwide mergers and acquisitions practice drives researchers pay great attention to the method of payment. And for decades, some progress has been made in this field. A large number of existing empirical studies have provided evidences that method of payment is one of the important factors which have impact on the creation of M&A value. However, as far as the determinants of method of payment, no consensus has been formed yet. Though western scholars have performed lots of researches from both macro and micro perspectives, their conclusions may be not suitable in interpreting and guiding Chinese M&A practice given that huge difference exists in capital markets between China and western countries. In addition, studies in method of M&A payment carried out by Chinese researchers' are not as sufficient as westerners', and most of them are theoretical analysis. Therefore, basing on empirical methodology and using Chinese data to test the correctness and validity of existing theories is the main task of this thesis.Basing on 265 M&A transactions taking place during 2006 and 2009 and using Logistic regression, this thesis has built a multiple regression model which includes not only micro factors but also macro ones to examine the specific determinants of method of M&A payment in Chinese M&A market. And several conclusions are formed such as:(1) no statistically significant correlation exists between control threat and method of payment; (2) the amount of mortgage assets is positively correlated to the probability of the usage of cash; (3) price of acquiring company stock has no significant correlation with method of payment; (4) risk of M&A transaction is negatively related to the probability of the usage of cash; (5) a positive correlation exists between future investment opportunities and the probability of the usage of stock payment; (6) state-owned enterprises and local government companies prefer to use cash as M&A payment; (7) the probability of the usage of stock payment increases with the level of economic development; (8) no correlation is found between fluctuations of stock market and method of payment; (9) from the perspective of currency policy, money supply is positively related to the probability of the usage of cash; Moreover, (10) no association has been found between Equity Division Reform performance and method of M&A payment.This thesis is organized as follows:in the introduction section, the research background and significance, study method and main innovations; Next section shows the review of domestic and abroad literatures from the perspective of both micro-factors and macro-factors; In the third section, ten hypothesis to be test are drawn by theoretical analysis; And section four describes modeling, variable selection and sample selection process; Section five are mainly composed by empirical analysis based on Logistic regression method and test of robustness; A summary of research findings, some recommendations for macro-management and micro-operation, and research limitations are given in the last section.