Asset Sales Research Articles

Coping with COVID‐19 shocks in rural Nepal

AbstractWe examine shocks experienced by rural Nepali households during the COVID‐19 pandemic. Households primarily experienced income and price shocks during a government‐imposed lockdown. During this time, households managed to effectively protect consumption, and mostly relied on credit (26%), asset sales (10%) and savings (8%). Debt levels nearly doubled, with limited changes to savings. We then leverage a long‐term randomized control trial (RCT) to assess whether beneficiaries of a livestock livelihood program are more resilient. Program beneficiaries are 6 percentage points less likely to take out new loans.

The Real Effects of Ratings Actions: Evidence from Corporate Asset Sales

We investigate whether and through which channel credit rating downgrades induce corporate restructurings. For a comprehensive sample, we find a strong and robust link between rating actions and subsequent restructuring activity and hypothesize these could be disciplinary (ex post efficient) or meant to counter tighter financial constraints (ex post inefficient). Based on the self-reported restructuring types and the choice of assets sold, we find evidence for rating-induced asset sales aimed to relax financial constraints. We find no evidence of firms addressing inefficiencies in their assets allocations as a result of rating actions. This paper was accepted by Victoria Ivashina, finance. Funding: F. Schlingemann gratefully acknowledges the financial support from the Barry J. Epstein Fellowship and the H.R. and Betty Young Fellowship. D. Bongaerts gratefully acknowledges the financial support from the Nederlandse Organisatie voor Wetenschappelijk Onderzoek Veni grant [Grant 016.135.059]. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4754 .

Capacity overhang and corporate disinvestment decisions

AbstractWe use a stochastic frontier model to estimate a firm's capacity overhang. We find that excess capacity is positively related to a drop in new capital expenditures, an accumulation of depleted long‐term assets, and outright sales of investment assets. However, the sale of long‐term assets (property, plant, and equipment [PP&E]) peaks for intermediate levels of excess capacity and then declines. We attribute this to growth options. We test for evidence of a preference ordering in the firm's choice of responding to excess capacity and find evidence for a pecking order in firm disinvestment, where sales of long‐term assets are a measure of last resort.

Constructing a Reproductive Health Account Under National Health Accounts Framework at Sub-District Levels in Karnataka, India

Reproductive Health Account construction was a long-envisioned dream in the State of Karnataka, India, for capturing inter-actor fund flows in reproductive health. Previous attempts in few states lead to successful identification of enablers and disablers within this systemic context. A Reproductive Health Account was constructed using primary reproductive health expenditure data, collected from a pre-estimated sample size of 519 households spread across 15 villages, using probability proportional to size method, from two selected sub-districts Channapatna and Ramanagara, having mediocre performance indices, within Ramanagara District of Karnataka. Secondary data were extracted from public health websites. Expenditures incurred on six types of health services by respondents of reproductive age group (15–49) during financial year, 2017–2018, within two sub-districts was collected over financial year, 2018–2019. Processed data were then converted to four ‘origin to destination’ matrices each capturing fund movement among two actors, based on accounting principles of National Health Account to develop a contextual Reproductive Health Account. Study included four actors namely financial sources, financial agents, health providers and health activities, all pertaining to reproductive health domain. Matrices helped identify a massive 87.23% burden on households, majorly financed by mortgage bearing astronomical interests and sale of meagre assets. Public sector healthcare at 5.47% was found performing unsatisfactorily. Tertiary level was absorbing disproportional amount of 62.93% funds in conjunction with the laboratory and imaging services. Moreover, pharmaceutical bills at 22.97% caused prolonged distress to these households. Government intervention towards absence and shortage of quality infrastructure at the primary and secondary sector levels needs reviewing, for containment of the massive out-of-pocket expenditures.

A Detailed Study of Winding Up of a Company

Abstract: This research provides a brief overview of the process of winding up a company, which involves the formal closure of a business entity through the sale of assets, settlement of liabilities, and distribution of proceeds to creditors and shareholders. The winding-up process can be either voluntary or compulsory, and requires compliance with legal and regulatory requirements. Factors affecting the duration of the process include the company's structure and outstanding debts.

Assessing the Smallholder Farmers’ Coping Strategies to the Effects of Climate Change: Evidence in Rural Districts of Northern Uganda

Background: The effects of climate change such as droughts, floods and land degradations normally result into crop failures among smallholder farmers. The effect is more adverse on smallholder farmers of Sub Sharan region owing to its low coping strategies and poverty prevalence. Assessing the smallholder farmers coping strategies to the effects of climate is an evitable thought if we want to develop sustainable coping options and policies to climate change. The main objectives of this study were to investigate the effects of climate change, and assess on how the smallholder farmers coped up with them. A cross-sectional survey research design was employed to generate data from the 360 randomly selected household heads across the nine parishes in the Sub County via a semi- structured questionnaire, interviews schedules to key informants and focus group discussion to smallholder farmer groups. The SPSS tool was used to analyze the effects of climate change and their coping strategies and presented in frequency distribution tables and correlation matrices. Results: The two most widely practiced coping strategies were sales of productive assets and reduction in food consumptions rates among the smallholder farmers. The results from the correlation analysis revealed that there were significant positive correlations between floods, droughts, famines, and sales of productive assets and reduction in consumption rates of food. Conclusion: The findings from the study note that there are several factors that work in synergy to influence the specific coping strategies by smallholder farmers to climate change. This therefore calls for more efforts from government and development partners to strengthen the agricultural extension services by customizing climate information delivery system, allocating more fundings to researchers to engineer climate-tolerant crop and animal resources, investing on water for production projects, renting out idle pieces land to investors by smallholder farmers in order to provide the additional source of earnings.

Does forest access reduce reliance on costly shock-coping strategies? Evidence from Malawi

Despite the potential for forest resources to act as a less costly shock-coping strategy for rural households, evidence of the nexus between access to forest resources and the nature of coping strategies employed by households remains scanty. Using panel data from Malawi, first, we explore how the type of shock (covariate or idiosyncratic) influences the choice of coping strategy adopted. Second, we determine whether access to forest resources reduces the likelihood and intensity of reliance on costly shock-coping strategies (consumption reduction, and sale of assets). The results show that households are more likely to adopt costly coping strategies when responding to covariate weather shocks. However, the reverse was found to be true in the wake of idiosyncratic shocks. Our findings show that the use of forest products helps poor households in cushioning against the effects of shocks. Forest products collection aids consumption smoothing while protecting asset depletion in the wake of covariate shocks. This makes the availability of forest resources a critical safety net. Within a sound access mechanism, sustainable use of forest resources can reduce the likelihood of vulnerable households falling into poverty traps.

The Influence of ROA, DER, Total Asset Turnover and Sales Growth on Firm Value (Study of Companies in the Consumption Goods Industrial Sector Listed on The IDX for The 2017-2021 Period)

This study aims to examine the effect of Return on Assets (ROA), Debt to Equity Ratio (DER), Total Asset Turnover and Sales Growth on Firm Value. The sample of this research is consumer goods industry sector companies listed on the Indonesian stock exchange from 2017-2021 using a purposive sampling method. There are 18 companies in the consumer goods industry sector that meet the criteria to be used as research samples. The analytical method used in this study is multiple linear regression. The dependent variable in this study is company value, measured using price book value (PBV). The results of this study indicate that ROA and Total Asset Turnover have a positive and significant effect on firm value, while DER and Sales Growth have no effect and are not significant on firm value. Simultaneously there is a significant effect on the variables ROA, DER, Total Asset Turnover and Sales Growth on Firm Value.

CLASSIFICATION OF BUSINESS AND ASSETS VALUATION GOALS

The purpose of the article is to develop a classification of the goals for valuation of all kinds of real and financial assets and businesses. Business valuation may be used for different directions and plays a key role in many segments of the financial industry: corporate finance, mergers and acquisitions, and portfolio management. The study used such scientific methods as analysis and synthesis of results, logic and analytical methods. Proposed classification of the goals for valuation of all kinds of real and financial assets and businesses involves the allocation of such assessment goals as business creation and acquisition; sale of business or real assets; increase equity and debt financing; property damage assessment; estate investment planning; liquidation or reorganization of the enterprise; compliance with legal requirements and court proceedings; pledge of state property. Authors have researched the different goals of valuation, taking into account the legislation of Ukraine.

The Effect of Asset Growth, Sales Growth and Capital Structure on Financial Distress and Value of the Firm in Sub-Sector Food and Beverage with Good Corporate Governance as Moderation

Purpose: The value of the firm is an important factor to determine the success of an enterprise. This study has eight problem formulations.
 Design/methodology/approach: The variables used in this study are asset growth, sales growth, capital structure, financial distress, the value of the firm, and good corporate governance as moderation. The population used in the study was 26 sub-sectors of food and beverage. As a sample, the researchers used many as 13 sub-sector of food and beverage. The research period was three years (2019-2021) during the pandemic Covid-19.
 Findings: The results of the study showed that asset growth had no effect or was not significant to the value of the firm, sales growth had no effect or insignificant effect on the value of the firm, and capital structure had an effect, in another word it was significant to the value of the firm, asset growth had no effect or was not significant to financial distress, sales growth had an effect or were significant to financial distress, the capital structure was influential and significant to financial distress, financial distress had no effect or insignificant effect on the value of the firm and financial distress with the value of the firm moderated by good corporate governance produces insignificant.
 Research limitations/implications: Based on the conceptual framework, researchers used Partial Least Square data processing and obtained three significant results, namely capital structure has a significant effect on the value of the firm, asset growth has a significant effect on financial distress and good corporate governance has a significant effect on the value of the firm. While the five influences are not significant.
 Paper type: Research paper

Fixed Asset Intensity, Leverage, Company Size and Sales Growth Against Tax Avoidance in Food and Beverage Manufacturing Companies

This study aims to determine the effect of fixed asset intensity, leverage, sales size and sales growth on tax avoidance in food and beverage manufacturing companies listed on the Indonesia Stock Exchange in 2015 – 2019. The research method used is quantitative method. The sample was determined based on the purposive sampling method and obtained a research sample of 30 issuers' financial statements. The sources used were secondary data in the form of financial reports and annual reports obtained from the Indonesia Stock Exchange website (www.idx.co.id). The data processing program uses the Statictical Product and Service Solution (SPSS) version 25 program.The data analysis method used was descriptive analysis and continued with requirements including normality test, multicollinearity test, heteroscedasticity test and autocorrelation test. The statistical method used to analyze the data using multiple linear regression analysis. Based on the results of multiple linear analysis test with a significant level of 5%, the results of this study concluded that the variable intensity of fixed assets and firm size had an effect on tax avoidance, while the variables of leverage and sales growth had no effect on tax avoidance.

Проблеми оцінки активів у процесі ліквідації банку

The aim of the article is to identify problematic issues of valuation of property (assets) of banks that are in the process of liquidation, and substantiate proposals for the desired solution, taking into account the need to protect the rights of bank creditors. Although the bankruptcy of banks causes significant economic and moral losses, the processes of removing insolvent banks from the market, their reorganization or liquidation are constantly taking place. Therefore, regulators and banks that have been declared insolvent face many questions, including the adequate valuation of banking assets and the determination of the liquidation estate. The article discusses approaches to asset valuation and features of their application in Ukrainian practice, as well as peculiarities of the sale of assets of banks in liquidation according to the Dutch auction model. It is noted that the imperfection of management of banks’ assets in the process of their functioning leads to discrepancies in the valuation of these low-quality assets in the liquidation procedure. It is determined that the ratio between the estimated value of assets and their book value for banks declared insolvent is on average 26.2 %, and the median value is 22.3 % This leads to a number of problems, including the inability of the Deposit Guarantee Fund (DGF) to ensure the repayment of part of the bank’s liabilities, which could be repaid in case of timely acceptance of tender offers at market value. It is noted that the most liquid assets, which are real estate and property, occupy an insignificant share in the structure of the liquidation mass – about 5 %, and the conversion rate in the sale of real estate quite often reaches 200 %. It is proposed, in accordance with European practice, to empower the Fund to monitor the assets of banks in the process of their functioning. The expediency of valuating assets not from the position of doing business «as usual» but from the point of view of the objective need to sell assets, focusing on the quick sale of assets at a market price, is emphasized. In order to improve the process of valuating the assets of an insolvent bank and focusing on the quick and transparent sale of the bank’s assets, it is proposed to implement the international experience of using loss-sharing agreements into domestic practice.

On the premature sale of assets

Valuing non-financial assets, appraisers usually do not take into account that sometimes their owners need to sell them anticipatory (before the end of their service life). In addition, the sale of an asset provides for a certain marketing period (time to wait for a suitable buyer). We propose a model for assessment the market value of an asset, taking into account these circumstances, based on the Discounted Cash Flow method. The benefits (cash flows) generated by the asset when it is used for its intended purpose in the coming period are assumed to be known. However, in this model, we additionally accept that the premature sale is due to the detection of (real or perceived) threats of a local nature, i.e. related only to a specific asset and its owner. At the same time, we consider the moment of local threat detection and the duration of marketing period of the asset as random variables. The formulas obtained also allow to take into account the impact of inflation, removable failures of the asset and its depreciation during the marketing period.

СУЧАСНИЙ РОЗВИТОК ІНФОРМАЦІЙНИХ СИСТЕМ І ТЕХНОЛОГІЙ БУХГАЛТЕРСЬКОГО ОБЛІКУ

The article identifies a necessity of automation of the process of organisation of accounting with availability of necessary resources and computer technologies for processing accounting information. When creating a computer information system of an enterprise, it is necessary to provide the means of rational organisation: expansion of the information capacity of analytical accounting; strengthening of control functions of financial accounting, which will ensure reflection of real changes in the movement and availability of the enterprise's assets; acceleration of processing of primary information; control over the safety of property; timely provision of information for optimal management. Automation of accounting with the help of Ukrainian software makes it possible to consolidate production discipline, identify responsibility centres, ensure the reliability of information, expediency, correctness, legality of financial and tax accounting, completeness and timeliness of business transactions using modern information systems. To automate financial accounting, the market offers "BAS AGRO. Accounting", which is a ready-made tool for solving all the tasks facing the accounting service of agricultural enterprises engaged in crop production, livestock, poultry farming, processing and sale of agricultural products. The possibilities and advantages of software products ("BAS Agro. Accounting", "Agri: Accounting", "PROFBALANS") are analysed, which help in the accounting process of the enterprise, accounting for its activities, accelerate the process of information processing, its generalisation and storage. The ProfBalance system allows you to perform typical accounting functions in various business sectors, including light industry, public services, mechanical engineering, wholesale and retail trade, and accounting in housing cooperatives. The automated, compact and reliable accounting and management accounting automation system is aimed at financial accounting, warehouse accounting, fixed asset accounting, personnel documentation, payroll, sales, and supply of goods and materials. Each programme is unique for financial accounting and is improved with the help of modern information technologies, specially developed for our country and versions of our own products with adaptation to the needs of Ukrainian users.

ENVIRONMENTAL ACCOUNTING AND TAXATION AND PERFORMANCE OF MANUFACTURING COMPANIES IN NIGERIA (2014 - 2022)

The argument from different quarters is premised on the fact that environmental accounting and taxation could lead to increased expenses for the companies or collapse of the companies due to higher production costs. This study therefore examined the effect of environmental accounting and taxation on the performance of manufacturing in Nigeria. Purposive sampling techniques were used to select fifteen companies from the manufacturing sector. An ex-post facto research design was employed. Secondary data used for the study was extracted from the financial reports of the selected companies. Variables used included Return on Assets (ROA) Sales Growth (SG) Environmental Costs (EC), and Environmental Liabilities (EL). Content analysis and multiple regression were used to analyze the data collected. The findings of the study revealed EC (0.0391597, p=0.017<0.05) and EL (0.0291861, p=0.033<0.05) have a positive and significant effect on the ROA of companies. Further results showed that EC ( - 0.032978, p= 0.598>0.05) and EL (-0.0277371, p=0.595>0.05) have negative and insignificant effects on the growth of companies. The study recommended that environmental accounting and taxation should be made an important inclusion in the financial reports of companies to ensure that companies engage in production activities that will not have adverse effects on the environment.

Coming back to life: How business families revitalize "dead money" through family foundations

This paper examines how business families use family foundations to revitalize "dead money" while increasing the reputation of the business family and its firms through charitable giving. The Wang & He (2018) model is applied from 2001 to 2019 to a sample of 100 US family foundations (two for each federal state) with about USD 1 million in assets. Results indicate that business families revitalize "dead money" through family foundations by investing it across different revenue sources, namely bonds, cash investments, and stocks, generating inflows in terms of dividends, interests, and net gains due to asset sales. However, family foundations hold much of these inflows as disposable net equity. Therefore, their administrative structure remains too basic, preventing operating margins from growing. Nonetheless, family foundations stay highly involved in charitable giving to do well to the reputation of the business family and its firms while doing good to society. Overall, we conclude that business families, through family foundations, partially succeed in revitalizing "dead money".

Transferred Emissions Are Still Emissions: Why Fossil Fuel Asset Sales Need Enhanced Transparency and Carbon Accounting

Transferred Emissions Are Still Emissions: Why Fossil Fuel Asset Sales Need Enhanced Transparency and Carbon Accounting

Strategic Asset Sales, Financial Contagion, and Optimal Interventions

Strategic Asset Sales, Financial Contagion, and Optimal Interventions

Prediksi Financial Distress dan Pengaruhnya Terhadap Return Saham Perusahaan Sub Sektor Industri Tektil dan Garmen yang Terdaftar di Bursa Efek Indonesia Periode 2017-2021

The aim of this research is to find out the potential for financial difficulties in the textile and garment industry subsectors for the 2017–2021 period. The research population consisted of 21 companies, with a research sample of as many as 10 companies. As for techniques in data analysis, it begins by measuring the potential for financial difficulties through the Springate calculation equation model, followed by panel regression data analysis, the classic assumption test, determination (R2), and hypothesis testing. According to research, eight of the ten companies that comprised the research sample declared financial difficulties during the study period. While the hypothesis test results show that working capital contributes to total assets, earnings before interest and tax contribute to total assets, profit before tax aids in the smooth discharge of liabilities, and sales of total assets have no significant impact on the company's stock return.

Сравнительный анализ правового регулирования цифровых финансовых активов в России и других странах

Today, a crypto economy is actively developing throughout the globe based on the use of cryptographic technologies for the creation of new digital products, including the issuance of digital financial instruments. The topic of regulation of digital financial assets (hereinafter referred to as DFA) is relevant in the world: since 2019, some countries, including Russia, began to introduce legal norms regarding the issuance of DFA, as well as the sale and turnover of such assets on the market. This article compares approaches to the regulation of DFA in Russia and globally, including the issue of determining financial instruments that will be related to these assets, aspects of the procedure for issuing, storing, and trading them, including the basic rights and obligations of issuers and investors in such assets, and the features of the operation of trading floors and platforms for issuing DFA. In general, two approaches to the regulation of DFA can be distinguished. The first approach is the application of existing rules to tokenized assets (for example, laws on securities and financial instruments); this approach is used in the United States. The second is regulation through the introduction of a new framework for the application of distributed ledger technology in financial services, for example, in Russia, Germany, Luxembourg, the European Union (EU), and Switzerland. This article examines the second approach, which is currently implemented in Russia, to identify differences with foreign regulation, for example, the use of custodian institution for accounting and storing digital assets, converting DFA into traditional financial assets, and creating rules for trading digital financial assets.