A Relook into the Impact of Divestitures in the Presence of Agency Conflicts: Evidence from Property Subsidiary Sell-Offs in China

Posted: 6 Nov 2017

See all articles by Ruoran Xu

Ruoran Xu

Independent

Yuen Leng Chow

National University of Singapore - Institute of Real Estate Studies

Joseph T. L. Ooi

National University of Singapore (NUS) - Department of Real Estate

Date Written: November 2, 2017

Abstract

We analyze property subsidiary sell-offs in China to examine her market reaction to firms' divestiture decisions. Overall, the response from the stock market is neutral. However, detailed analysis reveals that the market reacts differently to property subsidiary sell-off announcements by state-owned enterprises (SOEs) and non-SOEs. Consistent with findings from extant literature. We find statistically negative market returns associated with SOE sell-off announcements. We suggest that this divergent market reaction is influenced by the institutional feature of the Chinese market and is consistent with the high agency costs associated with state ownership.

Keywords: Divestiture; property sell-offs; SOEs; Agency costs; China

Suggested Citation

Xu, Ruoran and Chow, Yuen Leng and Ooi, Joseph T. L., A Relook into the Impact of Divestitures in the Presence of Agency Conflicts: Evidence from Property Subsidiary Sell-Offs in China (November 2, 2017). Journal of Real Estate Finance and Economics, Vol. 55, No. 3, 2017. Available at SSRN: https://ssrn.com/abstract=3064219

Ruoran Xu (Contact Author)

Independent ( email )

No Address Available
United States

Yuen Leng Chow

National University of Singapore - Institute of Real Estate Studies ( email )

21 Heng Mui Keng Terrace #04-02
119613
Singapore
+65-66015040 (Phone)

Joseph T. L. Ooi

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

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