Journal article
Plant Closings for Financially Weak and Financially Strong Firms
Quarterly journal of business and economics, Vol.31(3), pp.69-83
01 Jul 1992
Abstract
Permanent plant closing announcements provide information not only about the value of the closed plant, but also about the entire firm's financial condition. A permanent plant closing indicates the expiration of operating options attached to the plant as well as the out-of-themoney expiration of the option to sell the assets to other potential users. Unless investors already know the true value of the plant, the resulting downward revision in cash flows causes a negative stock price reaction at the closing announcement. This study shows that the stock price reaction is particularly negative for firms already in a weak financial condition and for plants that comprise a larger proportion of the firm's operations.
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Details
- Title
- Plant Closings for Financially Weak and Financially Strong Firms
- Creators
- Michael J. GombolaGeorge P. Tsetsekos
- Publication Details
- Quarterly journal of business and economics, Vol.31(3), pp.69-83
- Publisher
- College of Business Administration of the University of Nebraska-Lincoln
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Identifiers
- 991021881513304721