Selling assets to raise corporate capital
Alex Edmans, William Mann 15 February 2014
All firms need capital. Much research addresses the choice between issuing various types of securities – for example, between issuing debt and equity. However, another method of financing has received relatively little attention – selling non-core assets, such as property, divisions, or financial investments. This article explains the conditions under which an asset sale is the preferred means of raising capital, and highlights how a manager should go about deciding between selling assets and issuing securities.
Asset sales are a means of financing
Financial markets Frontiers of economic research
asymmetric information, capital, adverse selection, information asymmetry, lemons problem, asset sales, financing