TAKEOVER REGULATIONS AND THE MEDIUM OF EXCHANGE

Abstract

This thesis examines the determinants that affect payment method decisions in mergers and acquisitions in the aspect of takeover regulatory differences between the US and the UK during 1990 to 2014. Two main hypotheses are tested; the risk sharing and the market misvaluation. Meaning that the level of uncertainty and misvaluation (both bidder and target) affect the payment method decisions. The US evidence broadly lends support to these hypotheses because the bidders are the ones who choose the medium of exchange, then offer to the targets. The targets decide whether to take it or leave it. However, these relations are less pronounced in deals involving the UK target as target shareholders have the right to make payment method decisions. Thus, the findings of this thesis taken together suggest that regulatory differences affect payment method decisions diffently.