Meier, J-M and Servaes, H (2019) The bright side of fire sales. The Review of Financial Studies. ISSN 0893-9454 (In Press)
Abstract
Firms that buy assets in fire sales earn excess returns that are two percentage points higher than in regular acquisitions. The mechanism behind this result is the reduced bargaining power of the seller. We find no difference in real effects or in the combined returns for buyers and sellers between fire sales and regular acquisitions, suggesting that the quality of the match is similar in both types of transactions. The externalities of fire sales for other stakeholders are limited. These results indicate that the welfare losses associated with fire sales are smaller than previously thought.
More Details
| Item Type: | Article |
|---|---|
| Subject Areas: | Finance |
| Additional Information: | This is a pre-copyedited, author-produced version of an article accepted for publication in The Review of Financial Studies following peer review. The version of record: Jean-Marie Meier, Henri Servaes; The Bright Side of Fire Sales, The Review of Financial Studies, hhz019 is available online at: https://doi.org/10.1093/rfs/hhz019 |
| Subjects: |
C > Capital markets F > Financial risk |
| Date Deposited: | 15 Feb 2019 19:23 |
| Last Modified: | 02 Aug 2019 20:30 |
| URI: | http://lbsresearch.london.edu/id/eprint/1049 |
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