The Bright Side of Fire Sales

Meier, J-M and Servaes, H (2019) The Bright Side of Fire Sales. Review of Financial Studies, 32 (11). pp. 4228-4270. ISSN 0893-9454 OPEN ACCESS


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.

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Item Type: Article
Subject Areas: Finance
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© 2019 Oxford University Press and Society for Financial Studies.
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, 32 (11), pp4428-4270, is available online at:

Date Deposited: 15 Feb 2019 19:23
Date of first compliant deposit: 15 Feb 2019
Subjects: Capital markets
Financial risk
Last Modified: 12 Apr 2024 01:20
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