Do Asset Fire-Sales Exist?: An Empirical Investigation of Commercial Aircraft Transactions

Posted: 6 Aug 1998

See all articles by Todd C. Pulvino

Todd C. Pulvino

AQR Capital Management, LLC; CNH Partners

Multiple version iconThere are 2 versions of this paper

Abstract

This paper uses commercial aircraft transactions to determine whether capital constraints cause firms to liquidate assets at discounts to fundamental values. Results indicate that financially constrained airlines receive lower prices than their unconstrained rivals when selling used narrow-body aircraft. Capital constrained airlines are also more likely to sell used aircraft to industry-outsiders, especially during market downturns. Further evidence that capital constraints affect liquidation prices is provided by airlines' asset acquisition activity. Unconstrained airlines significantly increase buying activity when aircraft prices are depressed; this pattern is not observed for financially constrained airlines.

JEL Classification: G31, G32, G33, L93

Suggested Citation

Pulvino, Todd C., Do Asset Fire-Sales Exist?: An Empirical Investigation of Commercial Aircraft Transactions. Available at SSRN: https://ssrn.com/abstract=100315

Todd C. Pulvino (Contact Author)

AQR Capital Management, LLC ( email )

Greenwich, CT
United States

CNH Partners ( email )

2 Greenwich Plaza
1st Floor
Greenwich, CT 06830
United States
203-742-3002 (Phone)
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