Asset Sales and Increase in Focus

Posted: 10 Aug 1999

See all articles by Kose John

Kose John

New York University (NYU) - Department of Finance

Eli Ofek

New York University (NYU) - Department of Finance

Date Written: July 1994

Abstract

We find that asset sales lead to an improvement in the operating performance of the seller's remaining assets in each of the three years following the asset sale. The improvement in performance occurs primarily in firms that increase their focus; this change in operating performance is positively related to the seller's stock return at the divestiture announcement. The announcement stock returns are also greater for focus-increasing divestitures. Further, we find evidence that some of the seller's gains result from a better fit between the divested asset and the buyer.

JEL Classification: G34

Suggested Citation

John, Kose and Ofek, Eli, Asset Sales and Increase in Focus (July 1994 ). Available at SSRN: https://ssrn.com/abstract=5513

Kose John

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States
212-998-0337 (Phone)
212-995-4233 (Fax)

Eli Ofek (Contact Author)

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

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