Corporate Cash Management, Excess Cash, and Acquisitions (Financial Sector of the American Economy)
Jarrad, V.T. HarfordISBN: 0815335520;
How much cash should a corporation have and should we worry when they have too much? This question has been hotly debated by manager and investors recently because managers of many of America's leading corporations have chosen to keep the spoils of the long economic expansion rather than return them to investors. As corporate cash coffers burst at the seems, some topping $20 billion, should investors worry about what managers will do with the cash when they finally decide to spend it? This study tackles these and other questions related to corporate cash reserves. After developing a benchmark for the appropriate amount of cash a corporation in a given industry needs to fund its investments and survive an economic downturn, a group of cash-rich corporations are not only more acquisitive than other corporations, but they also tend to make poor acquisition choices, effectively squandering part of their cash reserves. The stock price reaction to acquisition announcements by...
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