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Internal vs external financing of acquisitions: Do managers squander retained profits?

Dickerson, Andrew, Gibson, Heather D., Tsakalotos, Euclid (2000) Internal vs external financing of acquisitions: Do managers squander retained profits? Oxford Bulletin of Economics and Statistics, 62 (3). 417-+. ISSN 0305-9049. (doi:10.1111/1468-0084.00178) (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided) (KAR id:16381)

The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided. (Contact us about this Publication)
Official URL
http:dx.doi.org/10.1111/1468-0084.00178

Abstract

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.

Item Type: Article
DOI/Identification number: 10.1111/1468-0084.00178
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 UTC
Last Modified: 28 May 2019 13:54 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/16381 (The current URI for this page, for reference purposes)
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