Does short-selling potential influence merger and acquisition payment choice?

• 成果类型: Article
• 署名作者: Dutordoir, Marie; Strong, Norman C.; Sun, Ping
• 署名单位: University of Manchester; Alliance Manchester Business School; University of Liverpool
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2022.03.002
• 发表日期: 2022
• 页码: 761-779
• 关键词: Merger arbitrage; M&A payment choice; Short selling

摘要

Announcements of stock-financed mergers and acquisitions (M&As) may attract short sell-ing of bidder shares by merger arbitrageurs. We hypothesize that bidders with higher short-selling potential include a higher proportion of cash in their M&A payments to miti-gate stock price declines resulting from arbitrage short sales. Consistent with this hypoth-esis, we find that the ex ante net lending supply of bidder shares has a positive impact on the percentage of cash in public target payments. Further tests, including a placebo analysis of public-to-private deals and an analysis of expected price pressure proxies, cor-roborate the impact of anticipated arbitrage-related price pressure on payment choice.(c) 2022 Elsevier B.V. All rights reserved.