The value of financing through cross-border asset sales: Shareholder returns and liquidity |
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| Institution: | 1. Department of Finance, College of Business, Iowa State University, Ames, IA 50011, USA;2. Finance Department, Stern School of Business, New York University, New York, NY 10012, USA;1. Faculty of Economics and Business, Monash University, Australia;2. UNSW School of Business, University of New South Wales, Australia;3. Sun Yat-sen Business School (SYSBS), Sun Yat-sen University, China;1. Department of Finance, Baylor University, One Bear Place #98004, Waco, TX 76798, United States;2. Cornerstone Research, 1919 Pennsylvania Avenue NW, Suite 600, Washington, DC 20006-3420, United States;1. Krannert School of Management, Purdue University, 403W. State Street, West Lafayette, IN 47907, United States;2. Harvard University and NBER, Harvard Business School, Baker Library 359, Boston, MA 02163, United States |
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| Abstract: | We examine a sample of 1458 divestitures of domestic assets by U.S. firms to foreign and domestic buyers over the period 1998–2008. Cross-border asset sales yield higher abnormal returns to the seller than domestic sales. This incremental return is driven by liquidity-seeking sellers engaging in cross-border transactions. Larger seller returns in these international deals are associated with favorable economic conditions in foreign buyers' home markets relative to the U.S. We also find positive abnormal returns for buyers, albeit smaller than seller returns, but no significant difference between buyer returns in cross-border and domestic transactions. |
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