The Impact of Company Acquiring or Disposing Fixed Assets on Stock Price and Future Performance
Date Issued
2012
Date
2012
Author(s)
Lai, Szu-Shuan
Abstract
Fixed assets are the fundamental of manufacturing. The decisions of acquirement or disposal about fixed assets create profound impact on manufacturing companies. Furthermore, the announcements of information also affect a corporation’s stock prices. This study uses Taiwanese manufacturing companies as sample and explores whether the purpose of acquirement or disposal conveys information content and results in future performance.
The results show that the announcements of acquiring productive equipment generate significant positive abnormal return; however, the results regarding the productive land, buildings or non-productive fixed assets are generally not significant. Second, firms disposing fixed assets have significant positive response to such announcements without respect to purpose. Third, productive fixed assets, including equipment, land and buildings increase the rate of sales growth and pre-tax net income growth, but non-productive fixed assets are nonsignificant associated with future performance. Finally, disposing fixed assets for any purpose does not impact on sales growth rate, but significantly affects pre-tax net income growth.
Subjects
fixed assets
purpose of acquiring or disposing fixed assets
information content
Type
thesis
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ntu-101-R99722033-1.pdf
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