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Financing Through Asset Sales
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Personen und Körperschaften: | , |
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Titel: |
Financing Through Asset Sales |
In: | Management Science, 65, 2019, 7, S. 3043-3060 |
veröffentlicht: |
Institute for Operations Research and the Management Sciences (INFORMS)
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Umfang: | 3043-3060 |
ISSN: |
0025-1909 1526-5501 |
DOI: | 10.1287/mnsc.2017.2981 |
Zusammenfassung: | <jats:p> Most research on firm financing studies debt versus equity issuance. We model an alternative source, non-core asset sales, and identify three new factors that contrast it with equity. First, unlike asset purchasers, equity investors own a claim to the firm’s balance sheet (the “balance sheet effect”). This includes the cash raised, mitigating information asymmetry. Contrary to the intuition of Myers and Majluf [Myers SC, Majluf NS (1984) Corporate financing and investment decisions when firms have information that investors do not have. J. Financial Econom. 13(2):187–221], even if non-core assets exhibit less information asymmetry, the firm issues equity if the financing need is high. Second, firms can disguise the sale of low-quality assets—but not equity—as motivated by dissynergies (the “camouflage effect”). Third, selling equity implies a “lemons” discount for not only the equity issued but also the rest of the firm, since both are perfectly correlated (the “correlation effect”). A discount on assets need not reduce the stock price, since non-core assets are not a carbon copy of the firm. </jats:p><jats:p> The online appendix is available at https://doi.org/10.1287/mnsc.2017.2981 . </jats:p><jats:p> This paper was accepted by Tomasz Piskorski, finance. </jats:p> |
Format: | E-Article |
Quelle: | Institute for Operations Research and the Management Sciences (INFORMS) (CrossRef) |
Sprache: | Englisch |