Corporate Sell-Offs in the UK: Use of Proceeds, Financial Distress and Long-Run Impact on Shareholder Wealth

21 Pages Posted: 12 Mar 2008

See all articles by Edward Lee

Edward Lee

University of Manchester - Alliance Manchester Business School

Steve Lin

University of Memphis

Abstract

This study examines the long-run return performance following UK corporate sell-off announcements. We observe significant negative abnormal returns up to five years subsequent to sell-off announcements. Our finding is robust to various specifications, irrespective of the intended use of proceeds. We also find a significantly positive association between long-run abnormal returns and the magnitude of cash proceeds for sellers reducing corporate debt as well as for sellers with deeper financial distress or higher growth prospects. Overall, we find that UK corporate sell-offs are associated with declines in subsequent shareholder wealth.

Suggested Citation

Lee, Edward and Lin, Steve, Corporate Sell-Offs in the UK: Use of Proceeds, Financial Distress and Long-Run Impact on Shareholder Wealth. European Financial Management, Vol. 14, Issue 2, pp. 222-242, March 2008, Available at SSRN: https://ssrn.com/abstract=1104778 or http://dx.doi.org/10.1111/j.1468-036X.2007.00390.x

Edward Lee (Contact Author)

University of Manchester - Alliance Manchester Business School ( email )

Booth St. West (Crawford House)
Manchester, M15 6PB
United Kingdom

Steve Lin

University of Memphis ( email )

Memphis, TN 38152
Memphis, TN usa 38152-3370
United States
38152 (Fax)

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