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Do firms with excess cash pay higher premia?

Magnusson, Jonas LU and Olayisade, Fiyinfoluwa (2014) BUSN89 20141
Department 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)
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author
Magnusson, Jonas LU and Olayisade, Fiyinfoluwa
supervisor
organization
course
BUSN89 20141
year
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},
  keyword      = {Mergers and acquisitions,Premia,Excess cash,Overconfidence,Hubris,Public acquisitions},
  language     = {eng},
  note         = {Student Paper},
  title        = {Do firms with excess cash pay higher premia?},
  year         = {2014},
}