Security price reaction to divestments by healthy and financially distressed firms: the case of MBOs

Saadouni, B., Briston, R. J., Mallin, Christine and Robbie, K. (1996) Security price reaction to divestments by healthy and financially distressed firms: the case of MBOs. Applied Financial Economics, 6 (1). pp. 85-90. ISSN 0960-3107

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Abstract

This paper examines the response of security prices to management buy out (MBOs) divestments and the difference in abnormal returns to shareholders of financially distressed and healthy divestors. It is hypothesized that healthy firms divesting businesses will experience a higher abnormal return than those divesting for reasons of financial distress. Excess returns are significantly both negative and higher for financially distressed firms than for healthy firms. The results suggest that, in examining the effect of corporate restructuring announcements on shareholders wealth, a distinction needs to be made between voluntary and involuntary divestments.

Item Type:	Article
Faculty \ School:	Faculty of Social Sciences > Norwich Business School
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Accounting, Finance and Governance (former - to 2017)
Depositing User:	Elle Green
Date Deposited:	07 Sep 2012 14:16
Last Modified:	24 Sep 2024 10:32
URI:	https://ueaeprints.uea.ac.uk/id/eprint/39488
DOI:	10.1080/096031096334493

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