Why do managers announce the intention to sell large assets?

Abe de Jong*, Pouyan Ghazizadeh, Frederik P. Schlingemann, Farhan Shazia

*Corresponding author voor dit werk

OnderzoeksoutputAcademicpeer review

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Samenvatting

Nearly one-third of asset sale announcements are preceded by a public statement of the intent to sell. These voluntary disclosures generate significant average returns of 1.1%. Pre-announcements bias returns around the actual asset sales toward zero. Due to opportunistic managerial behavior, pre-announcements occur after poor stock performance and CEO turnover. Managers also opportunistically exercise options around the pre-announcements and receive potential benefits from the uptick in stock prices. Although we find no effect of pre-announcements on long-term operational performance, we do observe a negative effect on stock returns using three and four-factor models.

Originele taal-2English
Pagina's (van-tot)641-668
Aantal pagina's28
TijdschriftInternational Review of Finance
Volume24
Nummer van het tijdschrift4
Vroegere onlinedatum8-jul.-2024
DOI's
StatusPublished - dec.-2024

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