Cash and corporate control

• 成果类型: Article
• 署名作者: Faleye, O
• 署名单位: Northeastern University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2004.00691.x
• 发表日期: 2004
• 页码: 2041-2060
• 关键词: agency costs; SHARE REPURCHASES; PROXY CONTESTS; MARKET; FLOW; determinants; performance; POLICY; firm

摘要

The takeover market is often suggested as appropriate for containing the agency problems of excessive corporate cash holdings. However, recent studies report contradictory evidence. I focus on the takeover-deterrence effects of corporate liquidity and suggest the proxy contest as an effective alternative control mechanism. I find that proxy fight targets hold 23% more cash than comparable firms, and that the probability of a contest is significantly increasing in excess cash holdings. Proxy fight announcement return also is positively related to excess cash. Following a contest, executive turnover and special cash distributions to shareholders increase, while cash holdings significantly decline.