Do sell‐off market returns benefit all shareholders?

Abstract

AbstractDrawing from the resource‐based view and agency theory, we examine market returns associated with sell‐off announcements under different profit scenarios in a newly developed economy. We further explore the impact of controlling ownership on sell‐off market returns to illuminate the effect of agency conflicts on managers' strategic behaviors. The results reveal positive returns if firms sell loss‐increasing divisions and negative returns when they sell profitable/loss‐decreasing divisions. These suggest that sell‐offs do not benefit all shareholders under certain circumstances. The level of controlling ownership of firms/family firms also exerts a positive impact on sell‐off market returns.