Open Access Open Access  Restricted Access Subscription or Fee Access

Simultaneous Equation Model for Interactive Relation between Capital Structure and the Payment Method

Sun Shipan, Zhao Xi, Li Shengnan

Abstract


The relation between capital structure and payment method is the core of mergers and acquisitions. However, the interactive relation between the 2 of them has never been highlighted by any previous researches. The interaction between capital structure and payment method is studied in the Paper. The findings indicate that there is a significant interaction between capital structure and payment method; stock-payment is much more preferred by acquirers during capital market upsurge. We also find that, though the interactive relation does exist, it is not fully consistent with the target leverage theory, which means that the leverage is optimized in cash-payment cases, and deteriorated in stock-payment cases; and motivate on leverage optimization is weaker in stock-payment cases. Moreover, policy suggestions are provided in the end of the Paper.

Keywords


Leverage Level, Mergers and Acquisitions, Payment Method.

Full Text:

PDF


Disclaimer/Regarding indexing issue:

We have provided the online access of all issues and papers to the indexing agencies (as given on journal web site). It’s depend on indexing agencies when, how and what manner they can index or not. Hence, we like to inform that on the basis of earlier indexing, we can’t predict the today or future indexing policy of third party (i.e. indexing agencies) as they have right to discontinue any journal at any time without prior information to the journal. So, please neither sends any question nor expects any answer from us on the behalf of third party i.e. indexing agencies.Hence, we will not issue any certificate or letter for indexing issue. Our role is just to provide the online access to them. So we do properly this and one can visit indexing agencies website to get the authentic information. Also: DOI is paid service which provided by a third party. We never mentioned that we go for this for our any journal. However, journal have no objection if author go directly for this paid DOI service.