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

Author

Listed:
  • Rajesh Kumar

    (Institute of Management Technology, Dubai)

  • Sarbjit Singh Oberoi

    (Institute of Management Technology, Nagpur, Maharashtra, India.)

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.

Suggested Citation

  • Rajesh Kumar & Sarbjit Singh Oberoi, 2019. "Cash Richness and Propensity to Acquire An Empirical Examination Based on Largest Deals," International Journal of Economics and Financial Issues, Econjournals, vol. 9(4), pages 74-79.
    • Handle: RePEc:eco:journ1:2019-04-8
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    References listed on IDEAS

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    More about this item

    Keywords

    Debt Repayment; Mergers and Acquisitions; Capital Investments; Cash reserves; Corporate Restructuring;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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