Restructuring Using Operating Asset Exchanges: Issues and Evidence

19 Pages Posted: 13 Jul 2010

See all articles by Kaysia Campbell

Kaysia Campbell

East Carolina University - Department of Finance

James E. Owers

Georgia State University - Department of Finance

Abstract

This study examines restructuring in which a firm divests an operating asset in exchange for another operating asset. Since liquidity, capital structure, and distributional issues are not immediately associated with tax-free asset-for-asset exchanges, they are well suited for examining the competing hypotheses related to divestitures. We find that the abnormal returns associated with asset exchanges are generally smaller than those associated with other divestiture restructurings except when indications of value are provided. Our analysis identifies positive valuation effects for firms undertaking focus-enhancing exchanges, but a dominating consideration is whether the value of the units traded is indicated.

Suggested Citation

Campbell, Kaysia and Owers, James Edwin, Restructuring Using Operating Asset Exchanges: Issues and Evidence. Financial Review, Vol. 45, Issue 3, pp. 825-843, August 2010. Available at SSRN: https://ssrn.com/abstract=1639206 or http://dx.doi.org/10.1111/j.1540-6288.2010.00273.x

Kaysia Campbell (Contact Author)

East Carolina University - Department of Finance ( email )

United States

James Edwin Owers

Georgia State University - Department of Finance ( email )

University Plaza
Atlanta, GA 30303-3083
United States
404-651-2628 (Phone)
404-651-2630 (Fax)

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