Effect of Acquisitions on Target Firms’ Financial Constraints

A reason for acquisitions is that target firms, prior to being acquired, are financially constrained, and that the firms often finance their investments by internal resources. But, after acquisition, the constraints reduce and access to financial resources increases. This study developed a panel dat...

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Autores principales:	Arash Goodarzi, Reza Tehrani
Formato:	article
Lenguaje:	FA
Publicado:	Shahid Bahonar University of Kerman 2017
Materias:	acquisition financial constraint cash flow investment capital and money market Accounting. Bookkeeping HF5601-5689
Acceso en línea:	https://doaj.org/article/269829ab88e44b70b2780125c6f00e5c
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spelling	oai:doaj.org-article:269829ab88e44b70b2780125c6f00e5c2021-11-04T19:52:15ZEffect of Acquisitions on Target Firms’ Financial Constraints2008-89142476-292X10.22103/jak.2017.1561https://doaj.org/article/269829ab88e44b70b2780125c6f00e5c2017-01-01T00:00:00Zhttps://jak.uk.ac.ir/article_1561_f51c5e83573b0087767c36668b740a5a.pdfhttps://doaj.org/toc/2008-8914https://doaj.org/toc/2476-292XA reason for acquisitions is that target firms, prior to being acquired, are financially constrained, and that the firms often finance their investments by internal resources. But, after acquisition, the constraints reduce and access to financial resources increases. This study developed a panel data regression model, using a sample of firms acquired by other firms, listed in the Tehran Stock Exchange in the years 1384 to 1393. The findings showed that the level of cash that target firms hold, and the sensitivity of cash to cash flow, as well as the sensitivity of investment to cash flow after acquisition decline, while investment increases. Thus acquisitions relieve problems on financial constraints in the target firms so that they may make investment decisions by reliance on access to both the external and internal financial resources.Arash GoodarziReza TehraniShahid Bahonar University of Kermanarticleacquisitionfinancial constraintcash flowinvestmentcapital and money marketAccounting. BookkeepingHF5601-5689FAمجله دانش حسابداری, Vol 7, Iss 27, Pp 83-108 (2017)
institution	DOAJ
collection	DOAJ
language	FA
topic	acquisition financial constraint cash flow investment capital and money market Accounting. Bookkeeping HF5601-5689
spellingShingle	acquisition financial constraint cash flow investment capital and money market Accounting. Bookkeeping HF5601-5689 Arash Goodarzi Reza Tehrani Effect of Acquisitions on Target Firms’ Financial Constraints
description	A reason for acquisitions is that target firms, prior to being acquired, are financially constrained, and that the firms often finance their investments by internal resources. But, after acquisition, the constraints reduce and access to financial resources increases. This study developed a panel data regression model, using a sample of firms acquired by other firms, listed in the Tehran Stock Exchange in the years 1384 to 1393. The findings showed that the level of cash that target firms hold, and the sensitivity of cash to cash flow, as well as the sensitivity of investment to cash flow after acquisition decline, while investment increases. Thus acquisitions relieve problems on financial constraints in the target firms so that they may make investment decisions by reliance on access to both the external and internal financial resources.
format	article
author	Arash Goodarzi Reza Tehrani
author_facet	Arash Goodarzi Reza Tehrani
author_sort	Arash Goodarzi
title	Effect of Acquisitions on Target Firms’ Financial Constraints
title_short	Effect of Acquisitions on Target Firms’ Financial Constraints
title_full	Effect of Acquisitions on Target Firms’ Financial Constraints
title_fullStr	Effect of Acquisitions on Target Firms’ Financial Constraints
title_full_unstemmed	Effect of Acquisitions on Target Firms’ Financial Constraints
title_sort	effect of acquisitions on target firms’ financial constraints
publisher	Shahid Bahonar University of Kerman
publishDate	2017
url	https://doaj.org/article/269829ab88e44b70b2780125c6f00e5c
work_keys_str_mv	AT arashgoodarzi effectofacquisitionsontargetfirmsfinancialconstraints AT rezatehrani effectofacquisitionsontargetfirmsfinancialconstraints
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Effect of Acquisitions on Target Firms’ Financial Constraints

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