TY - JOUR
T1 - Cash holdings and bond returns around takeovers
AU - Podolski, Edward J.
AU - Truong, Cameron
AU - Veeraraghavan, Madhu
N1 - Publisher Copyright:
© 2016 Elsevier Inc.
PY - 2016/7/1
Y1 - 2016/7/1
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?scp=84964541207&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84964541207&partnerID=8YFLogxK
U2 - 10.1016/j.irfa.2016.04.002
DO - 10.1016/j.irfa.2016.04.002
M3 - Article
AN - SCOPUS:84964541207
SN - 1057-5219
VL - 46
SP - 1
EP - 11
JO - International Review of Financial Analysis
JF - International Review of Financial Analysis
ER -