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Published: 02 March 2020

Paper published by Journal of Corporate Finance explores implications in asset sales and acquisitions

Recently published paper entitled ‘Selling to buy: Asset sales and acquisitions’ by Dr Christos Mavis, Nathan McNamee, Professor Dimitris Petmezas and Professor Nickolaos Travlos explores the impact of joint corporate asset restructuring decisions.

The study published in the Journal of Corporate Finance provides support and evidence for the sell-to-buy technique, which describes the process of selling an asset to fund an additional corporate investment. The research highlights the benefits to businesses engaging in this form of asset restructuring, which has important implications for academics, managers, and practitioners. Businesses that adopt the sell-to-buy method are associated with increased acquisition probability, while financially constrained firms are the ones that reap the most benefit from the asset sale acquisitions. Selling assets means that companies can raise the necessary funds to conduct focus-increasing acquisitions and in turn, improve their efficiency while eliminating the negative effects often associated with traditional borrowing methods, such as equity and debt issues.

 

Find out more about Surrey Business School’s research from the Department of Finance and Accounting.

Read the research paper here.

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