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Large shareholders, the board of directors and the allocation of cash proceeds from corporate asset sell-offs
journal contribution
posted on 2014-09-24, 10:36 authored by Ali Ataullah, Ian R. Davidson, Hang LeRecent finance literature suggests that managers of divesting firms may retain
cash proceeds from corporate asset sell-offs in order to pursue their own
objectives, and, therefore, shareholders’ gains due to these deals are linked to
a distribution of proceeds to shareholders or to debtholders. We add to this
literature by examining the role of various corporate governance mechanisms
in the context of the allocation of sell-off proceeds. Specifically, we examine
the impact of directors’ share-ownership and stock options, board composition
and external large shareholdings on (1) shareholders’ abnormal returns around
asset sell-off announcements, and (2) managers’ decision to either retain or
distribute (to shareholders or to debtholders) sell-off proceeds. We find that nonexecutive
directors’ and CEO’s share-ownership and stock options are related
to shareholders’ gains from sell-offs for firms that retain proceeds. However,
corporate governance mechanisms are not significantly related to shareholders’
gains for firms that distribute sell-off proceeds. Furthermore, we find that
the likelihood of a distribution of proceeds, relative to the retention decision,
is increasing in large institutional shareholdings, executive and non-executive
directors’ share-ownership and non-executive representation in the board.
History
School
- Business and Economics
Department
- Business
Published in
EUROPEAN FINANCIAL MANAGEMENTVolume
16Issue
2Pages
271 - 295 (25)Citation
ATAULLAH, A., DAVIDSON, I.R. and LE, H., 2010. Large shareholders, the board of directors and the allocation of cash proceeds from corporate asset sell-offs. European Financial Management, 16 (2), pp. 271-295.Publisher
© The authors / Journal Compilation © Blackwell Publishing LtdVersion
- NA (Not Applicable or Unknown)
Publisher statement
This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/Publication date
2010Notes
This paper is closed access.ISSN
1354-7798Publisher version
Language
- en