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Title: Large shareholders, the board of directors and the allocation of cash proceeds from corporate asset sell-offs
Authors: Ataullah, Ali
Davidson, Ian R.
Le, Hang
Keywords: Asset sell-offs
Large shareholders
Institutional investors
Boards of directors
Board composition
Issue Date: 2010
Publisher: © The authors / Journal Compilation © Blackwell Publishing Ltd
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.
Abstract: Recent 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.
Description: This paper is closed access.
Version: Closed access
DOI: 10.1111/j.1468-036X.2008.00447.x
URI: https://dspace.lboro.ac.uk/2134/15915
Publisher Link: http://dx.doi.org/10.1111/j.1468-036X.2008.00447.x
ISSN: 1354-7798
Appears in Collections:Closed Access (Business School)

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