The Impact of Announced Motives, Financial Distress, and Industry Affiliation on Shareholders' Wealth: Evidence from Large Seil-offs
Halil Kiymaz
What the paper says
This study investigates the impact of sell-off announcements on both divesting and acquiring firms. The findings indicate that both divesting and acquiring firms experience statistically significant wealth gains during sell-off announcements. For the matched sample, only divesting firms continue to have statistically significant wealth gains. Further analysis of the industry affiliation of divesting and acquiring firms indicates that there are differences in wealth gains with respect to industry affiliation. The cross-sectional regression results show that some motives reported in the Wall Street Journal are important in explaining the wealth gains to divested firms. There are direct relationships between wealth gains to divesting firms and motive announcements related to paying debt and increasing firm focus. Furthermore, wealth gains are higher for financially distressed firms and firms with higher bank loans when firms announce divestitures, supporting both bankruptcy avoidance and bank-monitoring arguments. Additionally, wealth gains are higher for firms with higher efficiency, as measured by total asset turnovers, and for firms with higher profitability.
11 citations
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.36 × 0.4 = 0.14 |
| M · momentum | 0.20 × 0.15 = 0.03 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.