An Empirical Study on the Impact of Asset Sales on Financial Performance of Listed Companies under the Background of Information Asymmetry

Abstract

The company's asset sale, like the company's M & A, is the means of the company's capital operation and the way for the company to adjust its business boundary or scale. As an important way of contractive capital operation, asset sale has been widely used in China's listed companies. However, there are few relevant studies and consensus on whether the capital sale behavior of China's listed companies can effectively improve the company's operating performance. This paper uses the financial indicators of the latest quarter after 678 asset sales events of 399 listed companies in Shanghai and Shenzhen stock markets from 2011 to 2021 as the research data, draws lessons from the research methods of Matthew J. Clayton and nazaliareisel (2013), takes earnings per share (EPS) and return on assets (ROA) as the explanatory variables, selects relative transaction value (RTV) as the key explanatory variable, and the greater the value of relative transaction value (RTV), It indicates that the larger the relative scale of asset sale, and the company's leverage ratio (Lev), net cash flow from operating activities per share (OCFPS) and asset liquidity are added(cur) and total asset turnover (TAT) as explanatory variables, this paper investigates the impact of asset sales on the company's short-term financial performance. The study finds that asset sales can improve the company's performance in the short term, and the degree of improvement increases with the expansion of relative transaction scale.