Determinants of shareholders' returns following announcements of asset sales: Evidence from Latin America
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2010
- handle: 10670/1.tt1h82
- 1012-8255
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Academia. Revista Latinoamericana de Administración
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Juan C Fernández de Ávila et al., « Determinants of shareholders' returns following announcements of asset sales: Evidence from Latin America », Academia. Revista Latinoamericana de Administración, ID : 10670/1.tt1h82
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Résumé
"This paper analyzes the stock market price reactions to announcements of asset sales by firms in Latin America. The high level of uncertainty, as well as the high intra-country variation in uncertainty that has been documented for this region, offers us an ideal setting to test the hypothesis that economic and institutional variables may differ between companies that are selling assets and companies that are buying assets. We find that companies that sell assets in the region earn positive cumulative abnormal returns (CAR) during the announcement, ranging from a 1.31 percent return on the announcement day to a 3.50 percent CAR for the ten days before and ten days after the announcement. The average market reaction in Latin America is stronger than that found in developed markets. Furthermore, the vendor company tends to be located in a country that enjoys a better institutional environment than the purchasing company."