Country uncertainty, power distance, and payment methods in acquisitions

Man Dang, Viet Anh Hoang*, Edward Jones, Darren Henry, Phuong Uyen Le, Premkanth Puwanenthiren

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)
68 Downloads (Pure)


This study examines the impact of country-specific uncertainty on the choice of payment method in international acquisitions. Our results show a negative association between the level of target country-specific uncertainty and cash transactions. Specifically, when the host country experiences a high level of country uncertainty, acquirers are more likely to choose non-cash transactions in which acquiring firms can issue their own equity to the target firm as part or all of the purchase consideration of the deal. The result is robust to alternative tests and analysis of subsamples. We also find that differences in uncertainty between host and home countries are informative of bidders’ payment choices. Further, we find that the negative relation between target country-specific uncertainty and cash payment weakens when there are larger differences in power distance between host and home countries. Our findings provide recommendations for policy-making bodies, and have implications for firm managers making corporate restructuring decisions.

Original languageEnglish
Pages (from-to)1541-1570
Number of pages30
JournalEuropean Journal of Finance
Issue number16
Early online date6 Sept 2021
Publication statusPublished - 30 Nov 2022


  • acquisitions
  • Country uncertainty
  • institutional environment
  • payment methods
  • power distance

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (miscellaneous)


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