Corporate Cash Reserves and Acquisition: Evidence from India

Abstract

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

Date of Award	2014 Jan 21
Original language	English
Supervisor	Ping-Hsun Huang (Supervisor)