haku: @indexterm CASH FLOW / yhteensä: 488
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| Tekijä: | Gregory, A. |
| Otsikko: | The long run abnormal performance of UK acquirers and the free cash flow hypothesis |
| Lehti: | Journal of Business Finance and Accounting
2005 : JUN/JUL, VOL 32:5-6, p. 777-814 |
| Asiasana: | Finance Cash flow Liquidity Mergers Companies Performance appraisal United Kingdom |
| Kieli: | eng |
| Tiivistelmä: | Evidence from recent U.S. and U.K. studies reveals a pattern of poor long run post acquisition performance by acquiring firms (hereafter as: acqs). One explanation, due to Jensen (1986) is that acqs. with an excess of free cash flow (FCF) will have a propensity to squander this on wasteful investments, incl. take-overs. In this paper, using a dataset of U.K. take-overs and proxies for FCF similar to those used by Lang, Stulz and Walking (1991), no support is found for the FCF hypothesis. This conclusion is shown to be robust to the model of long run returns employed. Contrary to the FCF hypothesis there is evidence that acqs. with high FCF perform better than acqs. with low FCF. Although not consistent with the Jensen hypothesis, this evidence is compatible with the emerging U.K. evidence showing cash flow-to-price measures to be associated with market returns. |
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