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Payment method, deal size, and market-adjusted acquirer returns in large United States mergers and acquisitions
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This work project studies how the method of payment affects acquirer stock performance in large US mergers and acquisitions. Using a sample of public bidders from 2010-2023 with deal value above 500 million dollars, I compute abnormal market-adjusted returns around announcement and up to one year after completion. Cross-sectional regressions show no significant payment effect at announcement, but stock-financed deals underperform cash-financed deals by around 10-13 percentage points at six and twelve months. Mixed offers lie in between, and the stock penalty is stronger for smaller transactions
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Mergers and acquisitions Payment method Stock versus cash Abnormal market-adjusted returns Deal size Method of payment choice United States acquirers Post-merger performance