TY  - BOOK
TI  - Cash windfalls and acquisitions
SN  - 0304-405X
PY  - 2018///
CY  - Amsterdam
PB  - Elsevier
N1  - Abstract
This article studies the effect of cash windfalls on the acquisition policy of companies. As identification, I use a German tax reform that permitted firms to sell their equity stakes tax free. Companies that could realize a cash windfall by selling equity stakes see an increase in the probability of acquiring another company by 14%. I find that these additional acquisitions destroy firm value. Following the tax reform, affected firms experience a decrease of 1.2 percentage points in acquisition announcement returns. These effects are stronger for larger cash windfalls. My findings are consistent with the free cash flow theory
ER  -