We examine the information asymmetry hypothesis and the management control hypothesis by examining the relation between insider trading and insider holdings to the choice of payment method in acquisitions. Our results indicate that both insider ownership and insider trading are significantly...

Previous research has shown that returns to bidders are significantly negative for stock acquisitions and insignificant although slightly positive for cash acquisitions. Two theories (Jensen and Myers-Majluf) would predict positive returns to bidders in cash acquisitions which use up excess cash...