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Cash holdings and bond returns around takeovers

Podolski, Edward J., Truong, Cameron and Veeraraghavan, Madhu 2016, Cash holdings and bond returns around takeovers, International review of financial analysis, vol. 46, pp. 1-11, doi: 10.1016/j.irfa.2016.04.002.

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Title Cash holdings and bond returns around takeovers
Author(s) Podolski, Edward J.
Truong, Cameron
Veeraraghavan, Madhu
Journal name International review of financial analysis
Volume number 46
Start page 1
End page 11
Total pages 11
Publisher Elsevier
Place of publication Amsterdam, The Netherlands
Publication date 2016-07
ISSN 1057-5219
Keyword(s) Takeovers
Cash holdings
Agency conflicts
Financial constraints
Shareholder power
Summary Using a large sample of 2712 unique U.S. domestic takeovers over the period 1993 to 2014, we show a negative relation between the level of cash holdings and post-announcement corporate bond returns. Our findings support the agency cost of cash holdings view and show that bondholders and shareholders share the same interests with respect to cash policy around takeovers. We further find that cash holdings are viewed less negatively by bondholders in firms with strong shareholders. This paper is the first to document the role of cash holdings on bondholder wealth around takeover announcements.
Language eng
DOI 10.1016/j.irfa.2016.04.002
Field of Research 150201 Finance
1502 Banking, Finance And Investment
1501 Accounting, Auditing And Accountability
1801 Law
Socio Economic Objective 919999 Economic Framework not elsewhere classified
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2016, Elsevier
Persistent URL http://hdl.handle.net/10536/DRO/DU:30083379

Document type: Journal Article
Collection: Department of Finance
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