91 NTU Management Review Vol. 31 No. 1 Apr. 2021 variables along with the instruments CEO tenure (tenure), tax losses indicator (taxloss) and profitability (roa). In the second stage, we estimate the bidding likelihood using the predicted values (vega and delta) from the first stage. The equation of the second stage is estimated by the probit model that controls for firm-fixed and time-fixed effects. Panel B of Table 3 reports the results based on two-stage least squares estimation and shows consistent findings that excess cash holdings can amplify the risk incentive effect of ESOs (vega) on M&A investments. The estimation further supports our first hypothesis. Table 3 The Effect of Excess Cash on the ESOs-Induced Corporate M&A Decision (cont.) Panel B: Two-Stage Least Squares First Stage Second Stage (Dep: MAt) Vega Delta (1) Full Sample (2) All-Cash Deals (3) Within Industry Sample (4) Within Industry & All-Cash Deals Tenuret-1 Taxlosst-1 ROAt-1 Vegat-1 Deltat-1 Cashricht-1 Vega×Cashrich Delta×Cashrich Cash/TAt-1 Salest-1 0.221*** (34.29) 0.0231 (1.59) 0.115 (1.23) 0.0048 (0.32) 0.0953* (1.78) 0.192*** (36.16) 0.0082*** (6.71) -0.0014 (-0.46) 0.0469** (2.20) -0.0064** (-2.03) 0.0253** (2.31) 0.0665*** (54.14) 0.443*** (2.62) -0.0353 (-1.50) -0.00945 (-0.68) 0.147 (1.36) -0.0354 (-1.24) 0.0378 (1.18) -0.0135 (-1.41) 0.0717 (0.61) -0.0107 (-0.58) -0.00287 (-0.29) 0.123* (1.67) -0.0199 (-0.95) 0.0239 (1.11) 0.00469 (0.77) 0.387*** (3.08) -0.00901 (-0.47) -0.0117 (-1.11) 0.160* (1.87) -0.0381* (-1.72) 0.0202 (0.85) -0.0219*** (-3.11) -0.0100 (-0.13) 0.0131 (0.92) -0.0107 (-1.44) 0.179*** (3.22) -0.0268* (-1.76) 0.00448 (0.28) -0.00341 (-0.81)
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