Hillier, D.J. and McColgan, P. and Wereman, S. (2009) Asset sales and firm strategy : an analysis of divestitures by UK companies. European Journal of Finance, 15 (1). pp. 71-87. ISSN 1351-847XFull text not available in this repository. (Request a copy from the Strathclyde author)
This paper examines the financial causes and consequences of the decision to sell-off non-financial assets as part of a new or ongoing restructuring programme by UK non-financial companies between 1993 and 2000. We report that asset sales follow a period of declining operating returns and tend to occur in diversified companies with high levels of financial leverage. Stock prices respond positively to asset sale announcements. This arises due to improvements in operating returns and a decline in financial leverage and corporate diversification subsequent to the disposal. Our findings suggest that asset sales represent an effective operational response to a firm's poor financial condition. However, we also find that a manager's decision to sell assets is strongly influenced by the explicit threats to their control from lenders and competition from product, labour and takeover markets.
|Keywords:||asset sales, corporate restructuring, firm strategy, managerial discipline, operating performance, Accounting, Economics, Econometrics and Finance (miscellaneous)|
|Subjects:||Social Sciences > Commerce > Accounting|
|Department:||Strathclyde Business School > Accounting and Finance|
|Depositing user:||Miss Donna McDougall|
|Date Deposited:||25 Jan 2010 16:01|
|Last modified:||27 May 2016 03:11|