Earnout deals : method of initial payment and acquirers' gain
Barbopoulos, Leonidas G. and Paudyal, Krishna and Sudarsanam, Sudi (2018) Earnout deals : method of initial payment and acquirers' gain. European Financial Management, 24 (5). pp. 792-828. ISSN 1354-7798 (https://doi.org/10.1111/eufm.12135)
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Abstract
We analyze the implications of initial payment methods in earnout deals on acquirers’ gains. The results, which are robust to self-selection bias and alternative model specifications, reveal that earnout deals outperform non-earnout deals. The acquirers gain the most from earnout deals when both initial and deferred payments are in stocks. The positive wealth effect of the choice of initial payment method in earnout deals is more prominent in cross-border deals than in domestic deals. Overall, the earnout deals generate higher gains when both the initial and deferred payments help spread the risk between the shareholders of acquiring and target firms.
ORCID iDs
Barbopoulos, Leonidas G., Paudyal, Krishna ORCID: https://orcid.org/0000-0002-0372-304X and Sudarsanam, Sudi;-
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Item type: Article ID code: 60195 Dates: DateEvent1 November 2018Published25 July 2017Published Online10 March 2017AcceptedSubjects: Social Sciences > Finance
Social Sciences > Commerce > AccountingDepartment: Strathclyde Business School > Accounting and Finance Depositing user: Pure Administrator Date deposited: 15 Mar 2017 10:37 Last modified: 30 Sep 2024 00:23 URI: https://strathprints.strath.ac.uk/id/eprint/60195