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Asset Sales and the Announcement Effect of the Expected Use of Proceeds - A study on the Swedish stock market's reaction

Waldix, Caroline LU and Ternlund, Sofie LU (2012) FEKN90 20121
Department 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)
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author
Waldix, Caroline LU and Ternlund, Sofie LU
supervisor
organization
course
FEKN90 20121
year
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},
  keyword      = {Announcement effect,Divestitures,Asset sales,Expected use of proceeds,Shareholder value,Market reaction},
  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},
}