This book examines how excess cash holdings affect firm and investor behavior in equity financed mergers and acquisitions. The theoretical framework for the study has been set based on research on firm capital structure and M&A outcomes. It therefore builds on a solid theoretical base, where optimality is seen as a basis for rational behavior. Equity financing has strong signaling effects, which have been reported to diminish shareholder value in the short-term especially if irrationally exercised. Reflecting on the selection of cash holdings, firms are subject to stronger signaling effects...