How trade credit affects mergers and acquisitions

May Hu, Jiayi Mou and Mataiasi Tuilautala

International Review of Economics & Finance, 2020, vol. 67, issue C, 1-12

Abstract: This paper examines the relationship between trade credit and mergers and acquisitions for the US listed firms from 1980 to 2014. We find that firms with higher trade credit are more likely to be acquirers and acquirers with higher trade credit are more likely to use cash offers rather than stock offers to the target. In addition, target premium is lower for acquirers with higher trade credit, for whom the abnormal returns after mergers and acquisitions are higher. Our results provide the complete evidence on how trade credit affects managerial decision to merge or acquire target firms, payment method, acquisition premium and post-performance in mergers and acquisitions context.

Keywords: Trade credit; Mergers and acquisitions; Market reaction (search for similar items in EconPapers)
JEL-codes: G24 G34 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056018311146
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:67:y:2020:i:c:p:1-12

DOI: 10.1016/j.iref.2019.12.004

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().