Methods of payment in asset sales: Contracting with equity versus cash

Myron B. Slovin, Marie Sushka, John A. Polonchek

Research output: Contribution to journalReview articlepeer-review

47 Scopus citations


We analyze intercorporate asset sales where equity is the means of payment, and compare the results to cash asset sales. Equity deals are value-enhancing for both buyers, 10%, and sellers, 3%, while cash sales generate seller returns of 1.9% and buyer returns that are not significant. Combined wealth gains are large for equity deals, but modest for cash deals. Equity-based asset sales are not a precursor to consolidations between buyers and sellers, and do not affect buyer openness to the takeover market. We conclude that the use of buyer equity conveys favorable information about the value of assets and buyers.

Original languageEnglish (US)
Pages (from-to)2385-2407
Number of pages23
JournalJournal of Finance
Issue number5
StatePublished - Oct 2005

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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