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| Payment Method, Related Party Acquisition and Acquirer’s Shareholder Returns |
| CHEN Tao1,LI Shanmin2,ZHOU Changshi2 |
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Abstract This paper studies the relation between method of payment and return of acquirer, based on asymmetric information theory, considering M&A with related party. Selecting 569 acquisition events of unlisted companies acquired by listed companies, we empirically study the acquirer return using event study method. The results show that the shareholders of acquirer earn a positive wealth effect in the acquisition for private target. The acquire returns are significantly positive with stock payment, while cash payment has no significant impact on acquirer returns. Related party acquisitions create greater returns than non-related acquisitions. And using stock payment in related party acquisition is generally associated with higher returns, while this effect is non-existent when the acquirer has a high ownership concentration.
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Received: 08 October 2012
Published: 15 September 2013
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Corresponding Authors:
CHEN Tao
E-mail: wilsonchentao@hotmail.com
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2013, Vol. 
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