Acquisitions of bankrupt assets
Acquisitions of bankrupt assets
Buyers of bankrupt assets could be penalized because of uncertainty about the value of such assets given their poor performance, and the absence of a guarantee offered by bankrupt estates. On the other hand, they could be rewarded if imperfections in the market for bankrupt assets result in deep discounts. In this paper, we assess 314 acquisitions of bankrupt assets over the period 1985–2006. We find that firms that acquire bankrupt assets experience significant positive valuation effects, suggesting that the market for bankrupt assets is imperfect. Second, the valuation effects are especially favorable when the acquisition is only of selected assets, and when the buyer is in the same industry as the bankrupt firm. No evidence of long run abnormal returns (above and beyond the initial valuation effects) is found for firms that acquire bankrupt assets
bankruptcy, liquidation, mergers, acquisitions, restructuring
748-759
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Madura, Jeff
d0a58acb-8d61-4120-b6d6-e091c1daf6c4
August 2009
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Madura, Jeff
d0a58acb-8d61-4120-b6d6-e091c1daf6c4
Jory, Surendranath and Madura, Jeff
(2009)
Acquisitions of bankrupt assets.
Quarterly Review of Economics and Finance, 49 (3), .
(doi:10.1016/j.qref.2008.12.001).
Abstract
Buyers of bankrupt assets could be penalized because of uncertainty about the value of such assets given their poor performance, and the absence of a guarantee offered by bankrupt estates. On the other hand, they could be rewarded if imperfections in the market for bankrupt assets result in deep discounts. In this paper, we assess 314 acquisitions of bankrupt assets over the period 1985–2006. We find that firms that acquire bankrupt assets experience significant positive valuation effects, suggesting that the market for bankrupt assets is imperfect. Second, the valuation effects are especially favorable when the acquisition is only of selected assets, and when the buyer is in the same industry as the bankrupt firm. No evidence of long run abnormal returns (above and beyond the initial valuation effects) is found for firms that acquire bankrupt assets
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Published date: August 2009
Keywords:
bankruptcy, liquidation, mergers, acquisitions, restructuring
Organisations:
Southampton Business School
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Local EPrints ID: 394339
URI: http://eprints.soton.ac.uk/id/eprint/394339
ISSN: 1062-9769
PURE UUID: 04f47f63-27dd-41c8-808a-e9ff815bdc50
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Date deposited: 13 May 2016 10:46
Last modified: 15 Mar 2024 03:45
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Author:
Jeff Madura
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