Abstract
Nearly one-third of asset sale announcements are preceded by a public statement of the intent to sell. These voluntary disclosures generate significant average returns of 1.1%. Pre-announcements bias returns around the actual asset sales toward zero. Due to opportunistic managerial behavior, pre-announcements occur after poor stock performance and CEO turnover. Managers also opportunistically exercise options around the pre-announcements and receive potential benefits from the uptick in stock prices. Although we find no effect of pre-announcements on long-term operational performance, we do observe a negative effect on stock returns using three and four-factor models. © 2024 The Author(s). International Review of Finance published by John Wiley & Sons Australia, Ltd on behalf of International Review of Finance Ltd.
Original language | English |
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Pages (from-to) | 641-668 |
Number of pages | 28 |
Journal | International Review of Finance |
Volume | 24 |
Issue number | 4 |
Early online date | 8 Jul 2024 |
DOIs | |
Publication status | Published - Dec 2024 |