Asset Sales and the Announcement Effect of the Expected Use of Proceeds - A study on the Swedish stock market's reaction
(2012) FEKN90 20121Department of Business Administration
- Abstract
- The purpose of this thesis is to investigate the Swedish stock market’s
reaction of asset sale announcements and to see how the stated use of
proceeds impacts the announcement effect. To fulfill the purpose the
following research questions are asked: Is there an announcement effect
associated with asset sales in general? Is the announcement effect, if any,
dependent on the stated use of proceeds? Does the market react more or
less favorably to a specific intended use compared to another?
In general, announcements of asset sales cannot be associated with
abnormal returns. However, the abnormal return is dependent on the
stated use of proceeds. Statistically significant results is presented that the
market reacts positively and... (More) - The purpose of this thesis is to investigate the Swedish stock market’s
reaction of asset sale announcements and to see how the stated use of
proceeds impacts the announcement effect. To fulfill the purpose the
following research questions are asked: Is there an announcement effect
associated with asset sales in general? Is the announcement effect, if any,
dependent on the stated use of proceeds? Does the market react more or
less favorably to a specific intended use compared to another?
In general, announcements of asset sales cannot be associated with
abnormal returns. However, the abnormal return is dependent on the
stated use of proceeds. Statistically significant results is presented that the
market reacts positively and the most favorable when the firm is expected
to keep the proceeds within the firm. When debt reduction is expected the
market reacts negatively and the least favorable. This thesis argues that
financial flexibility is the shared explanatory variable when access is
limited to constrained capital markets. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/2541758
- author
- Waldix, Caroline LU and Ternlund, Sofie LU
- supervisor
- organization
- course
- FEKN90 20121
- year
- 2012
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Announcement effect, Divestitures, Asset sales, Expected use of proceeds, Shareholder value, Market reaction
- language
- English
- id
- 2541758
- date added to LUP
- 2012-06-19 11:41:30
- date last changed
- 2012-06-19 11:41:30
@misc{2541758, abstract = {{The purpose of this thesis is to investigate the Swedish stock market’s reaction of asset sale announcements and to see how the stated use of proceeds impacts the announcement effect. To fulfill the purpose the following research questions are asked: Is there an announcement effect associated with asset sales in general? Is the announcement effect, if any, dependent on the stated use of proceeds? Does the market react more or less favorably to a specific intended use compared to another? In general, announcements of asset sales cannot be associated with abnormal returns. However, the abnormal return is dependent on the stated use of proceeds. Statistically significant results is presented that the market reacts positively and the most favorable when the firm is expected to keep the proceeds within the firm. When debt reduction is expected the market reacts negatively and the least favorable. This thesis argues that financial flexibility is the shared explanatory variable when access is limited to constrained capital markets.}}, author = {{Waldix, Caroline and Ternlund, Sofie}}, language = {{eng}}, note = {{Student Paper}}, title = {{Asset Sales and the Announcement Effect of the Expected Use of Proceeds - A study on the Swedish stock market's reaction}}, year = {{2012}}, }