Sources of shareholders' wealth gains from asset sales

Abdul Magid Gadad and Hardy Thomas

Applied Financial Economics, 2005, vol. 15, issue 2, 137-141

Abstract: This paper uses an event study approach to examine the performance improvements accruing to those UK firms making assets sales in a single divestiture. It is found that a divestiture announcement leads to an increase in shareholders' wealth of between 0.81% and 1.04% depending on the expected return model employed. The source of the wealth gain can be attributed to the relaxing of credit constraints achieved by reducing the level of debt.

Date: 2005
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DOI: 10.1080/0960310042000297917

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