Do asset sales lead to improvements in operating performance? |
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| Authors: | Abdul-Magid Gadad Hardy M Thomas |
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| Institution: | 1. Academy of Graduate Studies , Tripoli, Libya;2. University of Essex , Colchester, UK |
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| Abstract: | The changes in operating performance associated with asset sales are investigated for a sample of UK firms. Asset sales are followed by an improvement of 11% per annum in the level of operating performance relative to the pre-sale performance level. Further, improved abnormal operating performance is found, which is measured after controlling for the performance of the industry, the pre-sale performance of the firm and the level of competition in the market for asset sales. The abnormal operating performance of the remaining assets improve by 2.4% per annum, on average, for three years after the asset sales. This study also finds that the market for asset sales is imperfectly competitive. |
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