Value creation from asset sales: New evidence from bond and stock markets

Clayton, Matthew J.; Reisel, Natalia

doi:10.1016/j.jcorpfin.2013.03.002

Cited by 23 publications

(18 citation statements)

References 41 publications

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“…Positive stock reactions to divestiture announcements are also reported by Gadad and Thomas (2005), which attributes this effect to reducing the level of debt. Similarly, Clayton and Reisel (2013) provides evidence that high leveraged companies that use the proceeds to retire debt obtain excess stock and bond returns from asset sales. Comparing asset sales effects both in financially distressed and healthy firms, Lasfer et al (1996) find a stronger positive reaction for distressed companies, suggesting that asset sales represent a means for regaining financial health.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Tangible Asset Sales on Stock Returns: A Research on Manufacturing Companies Listed in Borsa Istanbul

Soylu¹

2020

berj

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Nowadays, due to economic fluctuations, increasing competition and technological development companies need to continuously and rapidly adapt to changing business environment. Furthermore, internal conditions like financial distress or strategy changing make the restructuring inevitable for companies. Within this frame, tangible assets sales might have an effect on firm value both by generating a source of financing and allowing companies to optimize their asset structure. In this study, the impact of tangible assets sales on stock returns of manufacturing companies listed on Borsa Istanbul was examined for the period of January, 2016-December, 2017 using event study method. The empirical results show significant positive average abnormal returns associated with the asset sales on announcement day.

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Section: Literature Reviewmentioning

confidence: 99%

The Impact of Tangible Asset Sales on Stock Returns: A Research on Manufacturing Companies Listed in Borsa Istanbul

Soylu¹

2020

berj

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“…6 Corporate restructuring is also associated with efficient resource allocation, increased focus on the core business, and reduction in debt to attain optimal capital structure after the divestiture. These factors are associated with the observed shareholders' wealth gains upon an asset sale (Hite, Owers, and Rogers, 1987;John and Ofek, 1995;Lang, Poulsen, and Stulz, 1995;Dittmar and Shivdasani, 2003;Bates, 2005;Clayton and Reisel, 2013). Maksimovic and Phillips (2001) show that the probability of an asset sale is related to a firm's organization and buyers' and sellers' ex ante efficiency gains.…”

Section: A Hypotheses Developmentmentioning

confidence: 99%

Size of Financing Need and the Choice between Asset Sales and Security Issuances

Desai¹,

Gupta

2018

Financial Management

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We study the effect of the size of financing need on a firm's choice between selling assets and issuing securities to finance its investments. The balance sheet effect predicts that a firm prefers to sell assets when the financing need is relatively small as there is less information asymmetry regarding the value of a (small) subset of its assets. When the financing need is large, a firm prefers issuing securities to selling assets. We find evidence supporting the prediction. Our findings remain unchanged when we employ measures of financing need that are relatively independent of the actual amount of financing raised.

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“…3 Corporate restructuring is also associated with efficient allocation of resources, increased focus on the core business, and reduction in debt to attain optimal capital structure after the divestiture. These factors are associated with the observed shareholders' wealth gains on an asset sale (Hite, Owers and Rogers, 1987;John and Ofek, 1995;Lang, Poulsen and Stulz, 1995;Dittmar and Shivdasani, 2003;Bates, 2005;Clayton and Reisel, 2013).…”

Section: Related Literature and Hypothesis Developmentmentioning

confidence: 99%

Divisional Informativeness Gap and Value Creation from Asset Sales

Desai

Gupta

2016

The Financial Review

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Nanda and Narayanan (1999) show that the information asymmetry between the managers and market participants regarding divisional cash flows helps explain the value creation on asset sales. Based on their theoretical framework, the divisional informativeness gap hypothesis predicts that the announcement‐period return increases with the difference in cash‐flow informativeness of retained and divested divisions prior to the divestiture. Our results, using industry‐average earnings response coefficient as a proxy for cash‐flow informativeness of a division, support this prediction. The effect is stronger when a conglomerate retains the division with relatively greater growth opportunities.

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Value creation from asset sales: New evidence from bond and stock markets

Cited by 23 publications

References 41 publications

The Impact of Tangible Asset Sales on Stock Returns: A Research on Manufacturing Companies Listed in Borsa Istanbul

The Impact of Tangible Asset Sales on Stock Returns: A Research on Manufacturing Companies Listed in Borsa Istanbul

Size of Financing Need and the Choice between Asset Sales and Security Issuances

Divisional Informativeness Gap and Value Creation from Asset Sales

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