Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments May 27, 2022 erstellt
Description:
We evaluate whether the adoption of performance commitment clauses in M&A deals affects the corporate liquidity of acquirers. Using a sample of Chinese M&A deals from 2007 to 2020, we find that firms signing performance commitment clauses in acquisitions are associated with lower liquidity, especially for deals paying incentives for target firms. The liquidity effect is more pronounced in firms with weaker corporate governance and high information opacity. The increased agency conflicts and extent of liquidity management are two plausible channels for the liquidity effect. Overall, the findings demonstrate that the performance commitment clauses in acquisition deals aggravate agency conflicts