Corporate Cash Reserves and Acquisition: Evidence from India

• Main Authors: Wan-ChunLee, 李宛蒓
• Other Authors: Ping-Hsun Huang
• Format: Others
• Language: en_US
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/6hbj8h

碩士 === 國立成功大學 === 財務金融研究所 === 102 === This paper examines whether cash-rich firms are more likely to engage in acquisitions and value-decreasing acquisitions. I find that cash-rich firms have a higher market-to-book ratio and a lower leverage ratio, implying that they have more investment opportunities, higher level of uncertainty in investments, and less possibility to raise debt. I find that cash-rich firms are more likely to become bidders in acquisitions than other firms and experience less underinvestment problem. My evidence also shows insignificant bidder returns, indicating that the acquisition decisions made by managers do not harm stockholders.