Ronald C. Rogers

The market for interfirm asset sales: Partial sell-offs and total liquidations

Abstract We investigate the valuation consequences of voluntary proposals to sell part or all of a corporations assets. For partial sell-offs, successful sellers and buyers reap statistically significant abnormal returns of 1.66% and 0.83%, respectively. Unsuccessful sellers realize gains at the bid announcement of 1.41% that are lost at the offer termination. In contrast, proposals to liquidate the firm are associated with significant average abnormal returns of 12.24%. We interpret these findings as evidence that asset sales are associated with the movement of resources to higher-valued uses rather than as evidence of market mispricing before the divestiture announcements.

Stockholder Reactions to CEO Changes in Large Corporations

The literature on leadership suggests that the performance context of a succession event and the origin of a newly appointed leader moderate the relationship between the succession and its conseque...

Diversification, Systematic Risk, and Shareholder Return: A Capital Market Extension of Rumelt's 1974 Study

This study reexamined the performance outcome of diversification strategies by combining the advantages of security-market-based measures and Rumelts classification scheme. The findings underscore...

Stock Price and Management Changes: The Case of REITs

This paper examines the relationship between a Real Estate Investment Trusts (REITs) stock returns and top management changes. The results indicate an inverse relationship between the probability of a management change and a REITs recent stock price performance. This is consistent with internal monitoring of management activities by the board of directors, other top managers, or large block shareholders.

Franchising and real estate brokerage

This paper examines the value of franchise affiliation to real estate brokerage firms. It uses a national sample to estimate models of brokerage firm sales and revenues. The results suggest that franchisees sell more properties than nonaffiliates, but that the average franchise sale results in less revenue. The net benefit of franchise affiliation is a 9.0 percent increase in net revenue to the average firm. We compare the initial cost of affiliation with the benefits and find that the up-front fees charged by franchisors are substantially lower than the present value of the stream of incremental profits generated by franchise affiliation.

An Analysis of Resolution Trust Corporation Transactions: Auction Market Process and Pricing

This article describes the operations of the Resolution Trust Corporation (RTC), examines the procedures it employs to resolve distressed Savings and Loan scenarios and investigates the pricing of transactions undertaken by the RTC. The RTC has been criticized for allegedly transferring properties to acquirers at “bargain” prices. The transactions involving publicly traded acquirers in RTC sales are examined from an auction theory perspective. Overall, there is little evidence that winning bidders experience stock price gains. There are, however, subsets of bidders for which the outcomes are predominantly negative. The only category of transactions which provide statistically significant gains to acquirers are Insured Deposit Transfers.

A Note on Refinancing Costs, Prepayment Assumptions, and the Value of Mortgage-Backed Securities

This article analyzes the effect and timing of the FHAs streamline refinance program on the value of GNMA 15s. The program announced in March 1989 reduced the refinancing costs for those mortgages of 15 percent and above. The program is expected to reduce the value of GNMAs. The authors find a reduction of .47 to 3.40 points in the value of GNMA 15s during the 3-week to 13-week period following the announcement of the plan. The drop in value translates into a wealth loss for GNMA 15 holders of about

The valuation impact of joint ventures

20 million over this time.