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Archive » September 2021 » Market effects of asset sales in banking: an empirical analysis

Market effects of asset sales in banking: an empirical analysis

Claudia Curi, Maurizio Murgia, Antonio Gagliostro
September 2021 - n. 9
Keywords: Asset sales, banking, cross country shareholder value creation, methods of payment, foreign disinvestments
Jel codes: G21, G22, G34

In this paper we study some highly debated research hypotheses on bank restructuring literature. Using a sample of asset sales transactions completed in 1999-2018 by listed banks in Oecd countries, we analyze cross-country market effects and shareholder value creation. We focus on the relative importance of deal and transaction characteristics such as the method of payment (cash vs. shares) and the asset country of operation (national vs. international) as deemed very important and controversial in the existant literature. The results show that market effects are greatest when buyers and sellers exchange assets operating in the same country (domestic transactions), while they are not affected by deal consideration (the method of payment). However, market effects are smaller the larger the size of the divestment operations.

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