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Corporate Governance and Agency Costs of Free Cash Flow in Acquisitions

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Corporate Governance and Agency Costs of Free Cash Flow in Acquisitions

Zhang, Xilin (2020) Corporate Governance and Agency Costs of Free Cash Flow in Acquisitions. Masters thesis, Concordia University.

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Abstract

This study directly relates corporate governance to agency costs of free cash flow in acquisitions. We proxy for agency costs of free cash flow by two measures: free cash flows at the fiscal year-end prior to the acquisition announcement and the eventual use of internally generated funds to finance the transaction. We investigate four aspects of corporate governance: institutional investor monitoring, board monitoring, the presence of antitakeover provisions, and executive incentive strength. We find that the quality of corporate governance indirectly affects merger outcomes by mitigating the agency problem associated with the holding, rather than the use, of free cash flows.

Divisions:Concordia University > John Molson School of Business > Finance
Item Type:Thesis (Masters)
Authors:Zhang, Xilin
Institution:Concordia University
Degree Name:M. Sc.
Program:Finance
Date:1 August 2020
Thesis Supervisor(s):Basu, Nilanjan
ID Code:987201
Deposited By: Xilin Zhang
Deposited On:25 Nov 2020 16:44
Last Modified:25 Nov 2020 16:44
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