Please use this identifier to cite or link to this item: https://scholarbank.nus.edu.sg/handle/10635/219493
Title: EFFECTS OF ASSET SALES ON SHAREHOLDER WEALTH IN REAL ESTATE CORPORATIONS
Authors: FOO WEN YUN
Issue Date: 2004
Citation: FOO WEN YUN (2004). EFFECTS OF ASSET SALES ON SHAREHOLDER WEALTH IN REAL ESTATE CORPORATIONS. ScholarBank@NUS Repository.
Abstract: A sell-off can be said to be a corporate restructuring activity to enhance firm value by shedding off non performing assets of assets that are of greater value to others and in doing so, creating an alternative financing source through private rather than the expensive capital markets. Firms undertake asset sales to divest away incompatible assets or investments so as to enhance firm performance as well as to create free cashflows for the firm. Just as each corporate strategy is aimed at enhancing the firm's performance, it is hoped that asset sales can increase shareholder wealth. Finance literature documented the wealth effects of the announcement of an asset sale accrued to sellers of asset, as there were positive and significant abnormal returns on the firm's stock prices. Although it is difficult to determine the magnitude and direction of returns that asset sales will bring for the firm's stocks for certain. There are several factors pertinent in the consideration of the wealth effects of asset sales as the returns tend to vary with characteristical differences in asset size, the intended use of the proceeds from the sale, the method of sale of the asset, the location of asset: whether it is overseas or in Singapore and whether the firm is engaged in a series of disposition exercise. The study shows that there positive and significant wealth effects that announcements accrue to the divesting firms. Firms show positive abnormal returns in immediate days prior to the announcements and negative returns in the post announcement period.
URI: https://scholarbank.nus.edu.sg/handle/10635/219493
Appears in Collections:Bachelor's Theses

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