Asset Liquidity and the Determinants of Asset Sales by Poorly Performing Firms

Financial Management, Vol. 31, No. 4, Winter 2002

Posted: 21 Jun 2003

See all articles by Timothy A. Kruse

Timothy A. Kruse

Xavier University - Department of Finance

Abstract

This study analyzes factors that potentially are associated with higher incidences of asset sales by poorly performing firms. Consistent with Shleifer and Vishny's (1992) asset liquidity model, I find that firms are more likely to sell assets if their industry's growth rate is higher. The relation is stronger among firms less likely to suffer from a lack of flexibility arising from poor financial health. Firms also are more likely to sell assets if they are suffering from low debt capacity, experiencing the nonroutine turnover of its top officer, or have made acquisitions prior to their performance decline.

Suggested Citation

Kruse, Timothy A., Asset Liquidity and the Determinants of Asset Sales by Poorly Performing Firms. Financial Management, Vol. 31, No. 4, Winter 2002, Available at SSRN: https://ssrn.com/abstract=359662

Timothy A. Kruse (Contact Author)

Xavier University - Department of Finance ( email )

United States

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