The Impact Of Economic Policy Uncertainty On M&A Payment Methods From The Perspective Of Financing Constraints

In recent years,China is in a critical period of economic development and policies are being enacted and adjusted more frequently.While these policies promote economic growth,they also expose Chinese companies to greater economic policy volatility and uncertainty and affect their investment decisions.Studies have shown that economic policy uncertainty impacts the level of cash holdings,financing efficiency,investment behavior and risk-taking of enterprises,and the choice of M&A payment method,as a vital part of an enterprise’s M&A investment behavior,is naturally affected by this macroeconomic uncertainty.In addition,considering that many scholars have researched the influencing factors of M&A payment methods,it is necessary to explore the impact of economic policy uncertainty on the choice of M&A payment methods from a macro perspective again.In addition,financing constraints are an essential factor influencing the choice of M&A payment methods.The research results of domestic scholars show that the higher the degree of financing constraints,there will have more companies that tend to use equity payments.Therefore,this paper tests the mediating effect played by financing constraints in it.Through a review of relevant literature and theories at home and abroad,this paper explains the influence mechanism of economic policy uncertainty on M&A payment methods from three perspectives: cash holding theory,information asymmetry and financial frictions.The following conclusions are drawn from the empirical evidence: firstly,the rise in uncertainty of economic policies makes enterprises more agreed to make the decision that stock payment is an appropriate choice.Secondly,there is heterogeneity in the impact of subcategories of economic policy uncertainty on M&A payment methods,among which the rise in this uncertainty of monetary and fiscal policies induces enterprises to use stock payment,the increase in uncertainty of exchange rate policies makes enterprises more inclined to use cash payment;Third,financing constraints play a part in mediating the effect of economic policy uncertainty on M&A payment methods.Last but not least,on the basis of the empirical evidence in this paper,relevant policy recommendations are made.It is recommended that managers of M&A firms should use equity payments and retain liquidity to improve their firms’ risk coping capacity during periods of high economic policy uncertainty;policymakers should enhance policy consistency as well as stability so that firms build up more stable expectations of policy to reduce the negative impact of uncertainty on their business operations;general firms should enhance their risk control tools and product competitiveness to cope with economic Enterprises in general should enhance their own risk control tools and product competitiveness to cope with the risks and challenges arising from rising policy uncertainties.