Write-down timeliness, line-of-business disclosures and investors' interpretations of segment divestiture announcements

Denton Collins, Steven Henning

Research output: Contribution to journalArticle

13 Scopus citations

Abstract

This paper examines investors' anticipation and subsequent interpretations of asset write-downs accompanying segment divestitures. Examining long-window returns cumulated over the two years preceding the year of divestiture, we hypothesize and find that investors anticipate write-downs of segment operating assets before divestiture and recognition occurs, with anticipation conditional on the timeliness of the write-down and prior disclosure of the segments' operating results under segment reporting rules. Short-window returns cumulated over the three days surrounding the announcement of the divestiture confirm that investor interpretations of asset write-downs are similarly contingent on write-down timeliness and prior disclosure.

Original languageEnglish
Pages (from-to)1261-1299
Number of pages39
JournalJournal of Business Finance and Accounting
Volume31
Issue number9-10
DOIs
StatePublished - Nov 2004

Keywords

  • Asset write-downs
  • Discontinued operations
  • Line-of-business disclosures
  • Timeliness

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