Biodiversity risk and payment methods in mergers & acquisitions
Year: 2025
Type: article
Abstract: • Examines how biodiversity risk affects payment method choices in M&A. • Higher target-firm’s biodiversity risk increases the likelihood of stock financing. • Higher information asymmetry between acquirers and targets strengthens the effect. • Greater financial constrain of acquirer strengthens the effect. • Weaker governance of acquirer strengthens the effect. • Identifies biodiversity risk as a novel, financially material factor in deal structuring. We document a significant increase in the percentage of stock financing in mergers and acquisition (M&A) deals when target firms’ biodiversity risk (BDR) is high. Further analysis shows that this relationship is enhanced by high information asymmetry between acquirers and targets, greater financial constrain and poor governance mechanisms of acquirers. These results remain robust across subsamples and alternative specifications, highlighting BDR as a novel and financially materialized factor shaping financing design of M&A deals.
Source: Finance research letters
Authors: Zhangxin Liu, Yue Qin, Rui Zhong
Institution: The University of Western Australia
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,730
OpenAlex ID: W4415979784