NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by Yeejin Jang

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Working Papers and Chapters

February 2013Do Acquisitions Relieve Target Firms' Financial Constraints?
with Isil Erel, Michael S. Weisbach: w18840
Managers often claim that an important source of value in acquisitions is the acquiring firm's ability to finance investments for the target firm. This claim implies that targets are financially constrained prior to being acquired and that these constraints are eased following the acquisition. We evaluate these predictions on a sample of 5,187 European acquisitions occurring between 2001 and 2008, for which we can observe the target's financial policies both before and after the acquisition. We examine whether target firms' post-acquisition financial policies reflect improved access to capital. We find that the level of cash target firms hold, the sensitivity of cash to cash flow, and the sensitivity of investment to cash flow all decline significantly, while investment significantly incre...
February 2012Financing-Motivated Acquisitions
with Isil Erel, Michael S. Weisbach: w17867
Managers often claim that an important source of value in acquisitions is the acquiring firm's ability to finance investments for the target firm. This claim implies that targets are financially constrained prior to being acquired and that these constraints are eased following the acquisition. We evaluate the extent to which acquisitions lower financial constraints on a sample of 5,187 European acquisitions occurring between 2001 and 2008. Each of these targets remains a subsidiary of its new parent, so we can observe the target's financial policies following the acquisition. We examine whether these post-acquisition financial policies reflect improved access to capital. We find that the level of cash target firms hold, the sensitivity of cash to cash flow, and the sensitivity of investmen...

Do Acquisitions Relieve Target Firms’ Financial Constraints?” (with Isil Erel and Yeejin Jang), The Journal of Finance, forthcoming.

Contact and additional information for this authorAll NBER papers and publicationsNBER Working Papers only

 
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