Disclosure of intended use of sell - off proceeds and long - run performance
نویسندگان
چکیده
This study investigates the long-run return performance following sell-off announcements of UK companies that apply the proceeds either for debt reduction or investment. Consistent with existing literature, we find that debt reduction sellers enjoy higher announcement time market reactions. In contrast, the subsequent longrun return performance is negative for the debt reduction sellers and positive for their investment counterparts. This disparity in shareholder wealth implies the market misjudges the priced information conveyed by the sell-off announcements. We find greater financial distress among the debt reduction sellers, indicating that their poorer fundamentals could have contributed to the value decline. JEL classification: G34
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