Cash Richness and Propensity to Acquire –An Empirical Examination Based on Largest Deals

Authors

  • Rajesh Kumar Institute of Management Technology, Dubai
  • Sarbjit Singh Oberoi

Abstract

The study aims to examine if cash rich firms become acquirers. The study was based on the largest 100 deals completed in the year 2017. The sample deal was selected among the 9000 deals in the year 2017. The source of data was Thomson Reuters. Firms were classified into cash rich and cash poor based on a baseline model. Six binary logistic regression models were used to examine the likelihood of a firm becoming an acquirer. The results suggest that higher the cash intensity, greater is the probability of firms becoming acquirer firms. In other words, cash rich firms tend to become acquirers. Higher the leverage, greater the propensity of firms to become acquirer. Lower EPS for firms have higher acquisition likelihood.

Keywords: Debt Repayment, Mergers and Acquisitions, Capital Investments, Cash reserves, Corporate Restructuring

JEL Classifications: G30; G34

DOI: https://doi.org/10.32479/ijefi.7867

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Author Biographies

Rajesh Kumar, Institute of Management Technology, Dubai

Finance , Professor

Sarbjit Singh Oberoi

I am working as  Professor in the department of  Quantitative Techniques and Operations Management at Institute of Management Technology, Nagpur, India.

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Published

2019-07-02

How to Cite

Kumar, R., & Oberoi, S. S. (2019). Cash Richness and Propensity to Acquire –An Empirical Examination Based on Largest Deals. International Journal of Economics and Financial Issues, 9(4), 74–79. Retrieved from https://econjournals.com/index.php/ijefi/article/view/7867

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