Stock Market Reaction to Sell-Offs Announcements: Canadian Evidence

14 Pages Posted: 19 Oct 2009 Last revised: 19 Jan 2010

See all articles by Claude Francoeur

Claude Francoeur

HEC Montréal

Alain Niyubahwe

affiliation not provided to SSRN

Date Written: October 16, 2009

Abstract

This study examines the effects of Canadian divestitures announcements on selling companies’ shareholder wealth. Using a non parametric bootstrap approach to test for significance, our results show that the sell-off announcement produces significant positive average abnormal returns of 0.92% over a two day announcement period. Gains arise predominantly from divestitures that focus firm’s activities. A cross sectional regression shows that private lender monitoring and focused operations have a positive and significant wealth effect on the divesting firms.

Keywords: sell-offs, wealth effect, focus, lender monitoring, financial distress

JEL Classification: G14, G34

Suggested Citation

Francoeur, Claude and Niyubahwe, Alain, Stock Market Reaction to Sell-Offs Announcements: Canadian Evidence (October 16, 2009). Available at SSRN: https://ssrn.com/abstract=1489931 or http://dx.doi.org/10.2139/ssrn.1489931

Claude Francoeur (Contact Author)

HEC Montréal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal H3T 2A7, Quebec
Canada

Alain Niyubahwe

affiliation not provided to SSRN ( email )

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