Cash holdings and bond returns around takeovers

Edward J. Podolski, Cameron Truong, Madhu Veeraraghavan

Research output: Contribution to journalArticlepeer-review

13 Citations (Scopus)


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.

Original languageEnglish
Pages (from-to)1-11
Number of pages11
JournalInternational Review of Financial Analysis
Publication statusPublished - 01-07-2016

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics


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