Cash Holdings, Governance and the Method of Payment Choice in European Acquisitions.
Independent thesis Advanced level (degree of Master (One Year)), 20 HE creditsStudent thesis
This paper examines the relationship between the cash richness of a firm, governance and the propensity to use equity or cash as the method of payment within European transactions. Strong corporate and country level governance have a positive impact on the probability to use cash as a method of payment. This supports the notion that the level of cash is influenced by agency conflicts, and acquisitions are a means to reduce cash holdings. The findings are robust to alternative measures for cash holdings as well as governance. The analysis furthermore shows that ownership structure is only significant for the method of payment decision in continental Europe, but not in Anglo-Saxon countries. My findings do not support the hypothesis that cash rich firms use significantly more equity than non-cash rich firms to compensate the vendor.
Place, publisher, year, edition, pages
2016. , 38 p.
IdentifiersURN: urn:nbn:se:uu:diva-279505OAI: oai:DiVA.org:uu-279505DiVA: diva2:908255
Master Programme in Business and Management
Gonenc, Halit, Dr.