TY  - JOUR
AB  - This paper investigates the role of method of payment in explaining the differences in returns to a bidding firm during the announcement period. The results indicate that the bidding firms’ returns are negative for equity payment bids and positive and significantly larger for cash bids. This is consistent with the view that cash‐offer announcements constitute a revelation by management of favorable new information about a firm’s future cash flows and vice versa for equity offerings. The results from this study provide an explanation of why business executives have been reluctant to issue equity even when they are raising the money to finance profitable projects like acquisitions. Executives relied on internal funds that allowed them to avoid the flotation costs of issuing new shares and the scrutiny by the financial market while limiting growth to that sustainable with internally generated funds.
VL  - 4
IS  - 1
SN  - 1935-5181
DO  - 10.1108/19355181198900007
UR  - https://doi.org/10.1108/19355181198900007
AU  - Tessema Asrat
PY  - 1989
Y1  - 1989/01/01
TI  - The Role of Medium of Exchange in Acquisitions
T2  - American Journal of Business
PB  - MCB UP Ltd
SP  - 39
EP  - 44
Y2  - 2024/04/26
ER  -