Tehranian and Travlos are from the Department of Finance, Boston College. Waegelein is from the Department of Accounting, University of Kansas. The authors thank Thomas Downs, Marcia Millon, George Papaioannou, John G. Preston, Jerry Viscione, and an anonymous referee for their helpful comments.
The Effect of Long-Term Performance Plans on Corporate Sell-Off-Induced Abnormal Returns
Article first published online: 30 APR 2012
1987 The American Finance Association
The Journal of Finance
Volume 42, Issue 4, pages 933–942, September 1987
How to Cite
TEHRANIAN, H., TRAVLOS, N. G. and WAEGELEIN, J. F. (1987), The Effect of Long-Term Performance Plans on Corporate Sell-Off-Induced Abnormal Returns. The Journal of Finance, 42: 933–942. doi: 10.1111/j.1540-6261.1987.tb03920.x
- Issue published online: 30 APR 2012
- Article first published online: 30 APR 2012
This study examines the association between long-term performance plans and wealth effects accruing to stockholders of divesting firms at announcements of sell-off proposals. The results indicate that divesting companies with long-term performance plans experience a more favorable stock market reaction at the announcement of sell-off proposals relative to firms without long-term performance plans. The findings imply that long-term performance plans serve as an effective mechanism to motivate managers to make better decisions.