Market Valuation Effect of Foreign Asset Divestitures in an Emerging Economy: Korean Evidence

Hyunchul Lee and Kyung-In Park

Emerging Markets Finance and Trade, 2016, vol. 52, issue 1, 136-153

Abstract: We find evidence that foreign asset divestitures announced by Korean listed firms lead to a decrement in firm value. Interestingly the divestiture announcements by firms with a large proportion of institutional investors, who hold advanced professionalism in stock investments, contribute to an increment in firm value, but ones by firms with a large proportion of individual investors lead to a decrement in it. Unlike the case of firms in advanced countries, our distinctive finding that the divestiture announcements produce a decrement in firm value around the announcement day sheds new lights on market valuation effects of foreign asset divestitures of firms in other emerging economies.

Date: 2016
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DOI: 10.1080/1540496X.2014.998533

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