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Selling to buy: Asset sales and acquisitions

Mavis, Christos, McNamee, Nathan, Petmezas, Dimitris and Travlos, Nikolaos (2020) Selling to buy: Asset sales and acquisitions Journal of Corporate Finance.

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Abstract

This study explores the impact of joint corporate asset restructuring decisions where firms sell an asset in order to fund a subsequent acquisition (selling-to-buy). We find that firms with asset sales are associated with increased acquisition probability. The effect is more pronounced for financially constrained firms. We also show that, in addition to the established improved firm efficiency from focus-increasing asset sales, financially constrained firms obtain the necessary funds to conduct focus-increasing acquisitions, improving further their efficiency. This translates into both higher long-run operating performance and stock abnormal returns at the asset sale announcement.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
NameEmailORCID
Mavis, Christosc.mavis@surrey.ac.uk
McNamee, Nathan
Petmezas, DimitrisD.Petmezas@surrey.ac.uk
Travlos, Nikolaosn.travlos@surrey.ac.uk
Date : 2 February 2020
OA Location : https://www.sciencedirect.com/science/article/pii/S0929119920300316?via%3Dihub
Copyright Disclaimer : © 2020 Published by Elsevier.
Uncontrolled Keywords : Asset sales, restructuring, operating efficiency, abnormal returns, financial constraints
Depositing User : James Marshall
Date Deposited : 13 Feb 2020 15:11
Last Modified : 13 Feb 2020 15:11
URI: http://epubs.surrey.ac.uk/id/eprint/853741

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