Bidder cash reserve effect under the precautionary motive: Evidence from UK

Arbeitspapier

Cash-rich bidders in UK have better announcement abnormal returns than cash-poor ones during 1984-2007, contrasting previous findings in the US. The positive cash reserve effect is mainly from bidders of high long-run growth or those with non-trivial institutional holdings. Moreover, cash-rich bidders' post-acquisition operating performance is positively related to bidder cash reserve and institutional holdings. Our results suggest the precautionary motive underlies bidder cash reserve effects. Specifically, cash-rich bidders are better positioned to capture growth opportunities arising from acquisitions. Our results also suggest that strong shareholder power is necessary to ensure cash reserved in the interests of shareholders.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Manchester Business School Working Paper ; No. 624

Classification and Topics

• Classification: Wirtschaft ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance ; Asymmetric and Private Information; Mechanism Design
• Subject: precuationary motive of cash reserve ; excess cash reserve ; acquisition ; institutional holding ; shareholder power ; announcement effect ; Übernahme ; Betriebliche Liquidität ; Ankündigungseffekt ; Unternehmenserfolg ; Großbritannien

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gao, Ning ; Mohamed, Abdulkadir
• Event: Veröffentlichung
• (who): The University of Manchester, Manchester Business School
• (where): Manchester
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/102370
• Last update: 10.03.2025, 11:44 AM CET