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Uncertainty Avoiding Behavior and Payment Mode Decisions in Cross- border Merger and Acquisition
Ankita Chhabra,
Published in Academy of Management
2017
Volume: 2017
   
Issue: 1
Pages: 1 - 2
Abstract

The present study tries to explore how differences in national culture attributes in terms of uncertainty avoidance (UA) affects the mode of payment opted by the acquirer. Prior research has looked into various firm-level and industry-level antecedents for mode of payment choice in M&A but the role of culture remains less explored. In this paper, we develop testable proposition regarding the payment choices opted by high- and low-UA countries. We propose that in order to mitigate the risk involved in cross- border acquisition (CBA) firms from high UA countries may prefer stock and earnouts as the mode of payment in comparison to cash. Further, drawing on anchoring perspective, we propose that firms from high-UA countries will anchor their mode of payment choice on prior deal in the same target host country. Additionally, we also conceptualized that the target firm industry affiliation might positively moderate the reliance of managers of high-UA country firms on anchoring while selecting mode of payment.

About the journal
JournalAcademy of Management Proceedings
PublisherAcademy of Management
ISSN0065-0668
Open AccessNo