Determinants Of Shareholder´s Returns Following Announcements Of Assets Sales: Evidence Of Latin America

This paper analyzes the stock market price reactions to announcements of asset sales by firms in Latin America. The high level of uncertainty, as well as the high intra-country variation in uncertainty that has been documented for this region, offers us an ideal setting to test the hypothesis that e...

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Bibliographic Details
Published in:	Academia (Consejo Latinoamericano de Escuelas de Administración) 2010-09 (45), p.40
Main Authors:	Juan C. Fernández de Ávila, Garay, Urby, Pablo, Eduardo
Format:	Article
Language:	por
Subjects:	Abnormal returns Asset acquisitions Corporate reorganization Debt (Financial) Developed Nations Divisions Hypotheses Institutional Environment Literature Reviews Market prices Motor Vehicles Sales Securities markets Stockholders
Online Access:	Get full text
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Summary:	This paper analyzes the stock market price reactions to announcements of asset sales by firms in Latin America. The high level of uncertainty, as well as the high intra-country variation in uncertainty that has been documented for this region, offers us an ideal setting to test the hypothesis that economic and institutional variables may differ between companies that are selling assets and companies that are buying assets. We find that companies that sell assets in the region earn positive cumulative abnormal returns (CAR) during the announcement, ranging from a 1.31 percent return on the announcement day to a 3.50 percent CAR for the ten days before and ten days after the announcement. The average market reaction in Latin America is stronger than that found in developed markets. Furthermore, the vendor company tends to be located in a country that enjoys a better institutional environment than the purchasing company.
ISSN:	1012-8255 2056-5127