99 NTU Management Review Vol. 31 No. 1 Apr. 2021 encouraged by ESOs and excess cash holdings to undertake M&A decisions can create better operating performance than those not conducting M&As. In other words, the role of excess cash in managers making the ESOs-induced M&A decisions is more related to precautionary motives rather than agency incentive. In panel B, the results are estimated based on the market-to-book ratio. The coefficients of Vega×Cashrich×MA are insignificantly negative. On the whole, these findings may suggest although investors do not consider the ESOs-induced M&As in cash-rich firms are necessarily driven by managerial incentive, they are still more concerned about the agency problem and thus provide less favorable feedback. Therefore, our results in Table 7 only marginally support the fourth hypothesis. Table 6 Announcement Effect of M&As for Firms in the Old and New Economy Panel A: Firms in Old Economy Dep: CAR(-2,+2) (1) (2) (3) (4) Full Sample All-Cash Deals Within Industry Sample Within Industry & All-Cash Deals Vegat-1 Deltat-1 Cashricht-1 Vega×Cashrich Delta×Cashrich Cash/TAt-1 -0.0184 (-1.00) 0.00551 (1.10) 0.00309 (0.48) 0.0244 (1.06) -0.00318 (-0.47) -0.00974 (-0.48) -0.0391 (-1.55) 0.00369 (0.59) -0.00807 (-0.82) 0.0780** (2.51) -0.00530 (-0.69) 0.0348 (1.25) 0.00837 (0.30) -0.00517 (-0.84) -0.000430 (-0.04) -0.0243 (-0.71) 0.0106 (1.16) 0.0170 (0.73) -0.0467 (-0.86) -0.00252 (-0.17) -0.0170 (-1.06) 0.0728 (1.08) 0.00688 (0.36) 0.0742** (2.34) Controls Year fixed effect Number of observations R-squared Yes Yes 1,044 0.076 Yes Yes 446 0.159 Yes Yes 463 0.130 Yes Yes 192 0.306
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