An Empirical Study of the Selection of the Calculating Methods in Consideration Payments

Using Multinomial Logit Model, the article makes an empirical study of how the s election of the calculating methods by the shareholders owning nonnegotiable s tocks in consideration payments is affected by such variables as earnings per share, pricetoearnings ratio, net asset value per share, pricetobook ratio, initial P/E ratio, and listing year. The findings show that the shareholders owning noncirculation stocks tend to select the method which can bring about the smallest consideration payments. It is thus necessary to require the sharehold ers owning noncirculation stocks should disclose the consideration payments resulting from the selection of different methods.