Do firms with excess cash pay higher premia?
(2014) BUSN89 20141Department of Business Administration
- Abstract
- This study implements a quantitative approach. For calculating excess cash we use Opler et al. (1999) approach. For bid premia model we use Alexandridis et al. (2013) approach. Testing our hypothesis we use regression analysis. We also include a survivorship bias approach. Public acquisitions by firms in the S&P 500 index; we also include dropped firms to bypass survivorship bias. Henceforth we show the importance of such an approach. Our sample consists of 519 non-financial firms, 565 public acquisitions and 2684 private acquisitions. In this investigation we find support for our main hypothesis, which says that excess cash is statistically significant in the regression model. The interpretation is that the more excess cash a firm has,... (More)
- This study implements a quantitative approach. For calculating excess cash we use Opler et al. (1999) approach. For bid premia model we use Alexandridis et al. (2013) approach. Testing our hypothesis we use regression analysis. We also include a survivorship bias approach. Public acquisitions by firms in the S&P 500 index; we also include dropped firms to bypass survivorship bias. Henceforth we show the importance of such an approach. Our sample consists of 519 non-financial firms, 565 public acquisitions and 2684 private acquisitions. In this investigation we find support for our main hypothesis, which says that excess cash is statistically significant in the regression model. The interpretation is that the more excess cash a firm has, the more they overbid. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/4777752
- author
- Magnusson, Jonas LU and Olayisade, Fiyinfoluwa
- supervisor
- organization
- course
- BUSN89 20141
- year
- 2014
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Mergers and acquisitions, Premia, Excess cash, Overconfidence, Hubris, Public acquisitions
- language
- English
- id
- 4777752
- date added to LUP
- 2014-11-14 11:58:08
- date last changed
- 2014-11-14 11:58:08
@misc{4777752, abstract = {{This study implements a quantitative approach. For calculating excess cash we use Opler et al. (1999) approach. For bid premia model we use Alexandridis et al. (2013) approach. Testing our hypothesis we use regression analysis. We also include a survivorship bias approach. Public acquisitions by firms in the S&P 500 index; we also include dropped firms to bypass survivorship bias. Henceforth we show the importance of such an approach. Our sample consists of 519 non-financial firms, 565 public acquisitions and 2684 private acquisitions. In this investigation we find support for our main hypothesis, which says that excess cash is statistically significant in the regression model. The interpretation is that the more excess cash a firm has, the more they overbid.}}, author = {{Magnusson, Jonas and Olayisade, Fiyinfoluwa}}, language = {{eng}}, note = {{Student Paper}}, title = {{Do firms with excess cash pay higher premia?}}, year = {{2014}}, }