Type of Submission

Refereed Article


This is the first study to consider the impact of payment method on announcement period returns in response to a merger and acquisition in the hospitality industry. Much research has been published on the returns to mergers and acquisitions generally and in the last ten years quite a bit has been published on this topic in hospitality journals. But very little has been published about the impact of payment method in hospitality mergers and acquisitions.

This paper uses standard event study methodology to determine abnormal returns for a sample of 282 bidding hospitality firms. The results are that an acquisition in the hospitality industry is more likely to be profitable if payment is made with cash. This provides empirical support for the asymmetric information and signaling theories premise that bidding firms will earn positive abnormal returns for cash offers, but returns are not significantly different than zero for stock offers.