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| Author: | Warusawitharana, M. |
| Title: | Corporate asset purchases and sales: Theory and evidence |
| Journal: | Journal of Financial Economics
2008 : FEB, VOL. 87:2, p. 471-497 |
| Index terms: | assets sales purchasing investments models companies USA |
| Language: | eng |
| Abstract: | This paper characterizes the behaviour of value-maximizing firms, which could grow organically, purchase existing assets, or sell assets. Provided is an endogenous selection model linking asset purchases and sales (here as: a-p-and-s.) to fundamental properties of the firm. Empirical tests confirm the predictions of the model. Especially, return on assets and size strongly predict when firms purchase or sell assets, and the transaction size covaries with the value of capital employed by the firm. It is indicated that corporate a-p-and-s. are consistent with efficient investment decisions. |
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