Excess Cash Holdings, Stock Returns, and Investment Organicity: Evidence from <scp>UK</scp> Investment Announcements

This paper examines whether the market reaction to investment announcements is conditional on company excess cash holdings. Cash may convey significant price-relevant information about future flows and strategic direction of a company. Using sample 4,256 corporate by firms listed London Stock Exchange over period 2005–2019, we show that reactions new are higher for with Furthermore, provide evidence relationship between holdings valuation various classes. The results reveal organic investments valued more highly than inorganic investments, positive impact pronounced set decisions, particularly product launches R&D. Lastly, evaluate how motive holding affects perception views as when held result high exposure risk, debt capacity, bid–ask spread. Market reverses from negative before after global financial crisis.