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To what extent does corporate liquidity affect M&A decisions, method of payment and performance? Evidence from China

Yang, J.; Guariglia, A.; Guo, J.

To what extent does corporate liquidity affect M&A decisions, method of payment and performance? Evidence from China Thumbnail


Authors

J. Yang

A. Guariglia



Abstract

Using a panel of Chinese listed firms over the period 1998–2015, we examine the extent to which liquidity impacts firms' acquisition decisions, method of payment choice, and performance following mergers. We observe that cash-rich firms are more likely to attempt acquisitions, especially if they are subject to tunneling. Next, we find that bidders with higher growth opportunities are less likely to use cash payments in acquisitions. This effect is stronger for financially constrained bidders, who face greater opportunity costs of holding cash. Our last set of results highlights the under-performance of cash acquisitions in both the short and long term.

Citation

Yang, J., Guariglia, A., & Guo, J. (2019). To what extent does corporate liquidity affect M&A decisions, method of payment and performance? Evidence from China. Journal of Corporate Finance, 54, 128-152. https://doi.org/10.1016/j.jcorpfin.2017.09.012

Journal Article Type Article
Acceptance Date Sep 21, 2017
Online Publication Date Dec 17, 2017
Publication Date Feb 28, 2019
Deposit Date Sep 22, 2017
Publicly Available Date Mar 29, 2024
Journal Journal of Corporate Finance
Print ISSN 0929-1199
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 54
Pages 128-152
DOI https://doi.org/10.1016/j.jcorpfin.2017.09.012
Public URL https://durham-repository.worktribe.com/output/1376023

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