The Wealth Effect of Asset Sales Announcement on Seller’s Rival, Customer, and Supplier
Date Issued
2006
Date
2006
Author(s)
Hsieh, Shu-Yu
DOI
en-US
Abstract
This paper uses a sample of 273 asset sales from 1990 to 2003 to examine the wealth effect of asset sales announcement on rivals of the seller, and on firms in the divestiture industry’s supplier and customer industries. The abnormal returns to the overall sample of rival and customer are positive and significant while the supplier has a significantly negative stock price effect. The sub-sample of rivals provides an evidence to support the efficiency deployment (focus) hypothesis that the positive return comes from the positive demand shock. The positive abnormal return to the customer mainly derives from the improvement of production efficiency of seller. Since sellers redeploy their resources to their remaining division increases the production, the advantage of price decreasing brings positive returns to the customer. The negative returns to the sub-sample of suppliers support the finance hypothesis. As seller uses the proceeds of asset sales to repay their debt and lower its leverage level, seller earns a bargaining power against supplier and has a negative wealth effect on supplier.
Subjects
資產出售
上下游
asset sales
customer
supplier
Type
thesis
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