Do asset sales lead to improvements in operating performance?

Abdul-Magid Gadad and Hardy Thomas

Applied Economics, 2004, vol. 36, issue 8, 865-871

Abstract: The changes in operating performance associated with asset sales are investigated for a sample of UK firms. Asset sales are followed by an improvement of 11% per annum in the level of operating performance relative to the pre-sale performance level. Further, improved abnormal operating performance is found, which is measured after controlling for the performance of the industry, the pre-sale performance of the firm and the level of competition in the market for asset sales. The abnormal operating performance of the remaining assets improve by 2.4% per annum, on average, for three years after the asset sales. This study also finds that the market for asset sales is imperfectly competitive.

Date: 2004
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DOI: 10.1080/0003684042000229578

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