Author(s)

Zhenzhen Wang

Corresponding Author

Zhenzhen Wang

ABSTRACT

Based on the data of Chinese A-share listed companies from 2011 to 2020, this paper finds that corporate cash holdings promote corporate acquisitions. The better the macroeconomic situation, the more likely companies are to make acquisitions. In a bad economy, a high level of cash holdings will promote corporate acquisitions, and the promotion effect is very significant. In better times, cash has little incentive to make acquisitions happen. In addition, economic policy uncertainty inhibits corporate acquisitions. Finally, the endogeneity problem is eliminated through instrumental variable regression.

KEYWORDS

Cash Holdings, GDP Growth Rate, Economic Policy Uncertainty