Economic Policy Uncertainty,Financing Constraints And M&A Payment Methods

As a major investment of M&A enterprises,M&A decision will have a significant impact on enterprises because of its large scale,wide range and far-reaching impact on enterprises.The choice of M&A payment method is a key link in the whole process of M&A.rational choice of M&A payment method is an important guarantee for the success of M&A and the realization of the purpose of M&A,and its impact on the subsequent operation and integration of the company cannot be ignored.which is particularly obvious for those enterprises that are faced with financing constraints.Some researches have studied the influencing factors of M&A payment from the perspectives of internal financial characteristics,internal control and the characteristics of M&A transactions.Studies have shown that higher shareholder holding ratios,the nature of non-state holding companies' property rights,higher financing constraints,and the size of mergers and acquisitions all increase the tendency of M&A companies to use stocks to pay M&A consideration.However,previous researches were limited to the internal characteristics of enterprises and the status of M&A transactions,and rarely considered the external macro environment of enterprises.The research has a certain one-sidedness.Since the "financial crisis" in 2008,the world economy as a whole is still in constant fluctuation,and China's economy is also subject to the impact of this fluctuation.Moreover,under the new normal,China's economy itself is also facing various domestic contradictions,and the prospects for economic development are uncertain,so the country's economic policy adjustments are becoming more frequent.On the one hand,the continuous adjustment of economic policies will aggravate the degree of information asymmetry between the company's management and external capital providers,,on the other hand,it will weaken the ability of the management to judge the future operation form of the enterprise,which means that the difficulty of the management in making relevant decisions will increase,so the enterprise will face higher operation risk and financial risk.In the face of these risks,external related agencies usually have less supply of funds or higher requirements for higher returns,thereby forming corporate financing constraints.Domestic scholars have empirically tested the relationship between financing constraints and payment methods of M&A.It is generally believed that the higher the degree of financing constraints faced by companies,the stronger the willingness of companies to use stocks as consideration for M&A payments.Therefore,the purpose of this paper is to study the relationship between economic policy uncertainty and the payment method of M&A and the intermediary effect of financing constraints.This article takes economic policy uncertainty,financing constraints and corporate M&A payment methods as the theoretical basis for research,and puts forward relevant assumptions on this basis,based on the merger and acquisition transactions that occurred in the A-shares of China and Shanghai in 2010-2019,we use empirical evidence to verify the impact of economic policy uncertainty on the M&A payment method and its mechanism.The results show that during periods of high economic policy uncertainty,companies are more likely to use stocks for payment in M&A transactions.Further research found that financing constraints have an intermediary effect on the impact of economic policy uncertainty on corporate M&A payment methods,in times of high economic policy uncertainty,companies often face more severe financing constraints,and financial support from various external financing sources may be restricted,which may result in companies failing to raise sufficient,low-cost funds.M&A companies are forced to choose stocks as the consideration for M&A payments.This article discusses the influencing factors of corporate M&A payment methods from the macro perspective of economic policy uncertainty,and further combs the functioning methods in conjunction with the financing constraint theory,which provides a reference for companies facing financing constraints in the period of economic policy uncertainty to formulate appropriate M&A payment mode,and also provides a new perspective for further research on financing constraints and M&A payment methods.