Do Acquisitions Relieve Target Firms' Financial Constraints?

• 成果类型: Article
• 署名作者: Erel, Isil; Jang, Yeejin; Weisbach, Michael S.
• 署名单位: University System of Ohio; Ohio State University; Purdue University System; Purdue University; National Bureau of Economic Research; University System of Ohio; Ohio State University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12155
• 发表日期: 2015
• 页码: 289-328
• 关键词: internal capital-markets; corporate diversification; dark side; cash flow; INVESTMENT; determinants; mergers; COMPETITION; liquidity

摘要

Managers often claim that target firms are financially constrained prior to being acquired and that these constraints are eased following the acquisition. Using a large sample of European acquisitions, we document that the level of cash that target firms hold, the sensitivity of cash to cash flow, and the sensitivity of investment to cash flow all decline, while investment increases following the acquisition. These effects are stronger in deals that are more likely to be associated with financing improvements. Our findings suggest that acquisitions relieve financial frictions in target firms, especially when the target firm is relatively small.