Dickerson, A.P. and Gibson, H.D. and Tsakalotos, E. (2000) Internal vs external financing of acquisitions: Do managers squander retained profits? Oxford Bulletin of Economics and Statistics, 62 (3). 417-+. ISSN 0305-9049.
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It is often argued that managers who have control over investment finance are more likely to pursue their own goals while those who have to raise funds externally are effectively monitored by the financial markets. One implication is that externally finances investment should be more profitable than internally financed investment. We focus on investment in acquisitions and show that its negative net impact on profitability las seen in previous studies) derives from externally, rather than internally, financed acquisitions. Our results therefore do not support the hypothesis that managers squander internal funds on poor investment projects. Indeed, the evidence suggests that capital markets and financial institutions do not appear to generate the anticipated beneficial effects.
|Subjects:||H Social Sciences > HB Economic Theory|
|Divisions:||Faculties > Social Sciences > School of Economics|
|Depositing User:||P. Ogbuji|
|Date Deposited:||27 Mar 2009 15:58|
|Last Modified:||25 Apr 2012 11:11|
|Resource URI:||http://kar.kent.ac.uk/id/eprint/16381 (The current URI for this page, for reference purposes)|
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