The Influence of Cash Ownership on Financial Performance: An Examination of Disruptors and Acquirers

Cash ownership emits a powerful positive signal. We examine four sources of cash in firms, i.e., flows, holdings, proceeds from debt, and equity. the effects for firms growing by disruption, acquisition. Information signaling theory maintains that free flows may be used to increase shareholder wealth. Two-stage least squares regressions determined impact funding on disruptors size acquisition first stage, cash-funded disruption or second US sample 832 disruptor 924 acquirers, 2000–2020. Disruptions funded flow, significantly increased stock returns. A effect was observed, with small showing significant effects. Acquisitions returns return assets. Agency costs reduced profits. Results disruptions acquisitions support higher share prices both profits acquirers.