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An event analysis of industrial timberland sales on shareholder values of major U.S. forest products firms

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  • Sun, Xing
  • Zhang, Daowei

Abstract

We used an event study to investigate the impact of industrial timberland sales from 1997 to 2007 on shareholder values of major U.S. forest products firms. Cross-sectional regression analysis and Capital Asset Pricing Model were used to examine factors influencing changes in market capitalization and systematic risk before and afterward. The average cumulative abnormal rates of returns associated with the timberland sales were found to be positive for all firms, and the resulting change in capitalization was related to these firms' total asset and debt. The systematic risk for these firms changed little or increased slightly after the timberland sales.

Suggested Citation

  • Sun, Xing & Zhang, Daowei, 2011. "An event analysis of industrial timberland sales on shareholder values of major U.S. forest products firms," Forest Policy and Economics, Elsevier, vol. 13(5), pages 396-401, June.
  • Handle: RePEc:eee:forpol:v:13:y:2011:i:5:p:396-401
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    References listed on IDEAS

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    1. Randal R. Rucker & Walter N. Thurman & Jonathan K. Yoder, 2005. "Estimating the Structure of Market Reaction to News: Information Events and Lumber Futures Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(2), pages 482-500.
    2. Jensen, Michael C, 1969. "Risk, The Pricing of Capital Assets, and the Evaluation of Investment Portfolios," The Journal of Business, University of Chicago Press, vol. 42(2), pages 167-247, April.
    3. Mei, Bin & Sun, Changyou, 2008. "Event analysis of the impact of mergers and acquisitions on the financial performance of the U.S. forest products industry," Forest Policy and Economics, Elsevier, vol. 10(5), pages 286-294, April.
    4. Jones, Philip C. & Ohlmann, Jeffrey W., 2008. "Long-range timber supply planning for a vertically integrated paper mill," European Journal of Operational Research, Elsevier, vol. 191(2), pages 558-571, December.
    5. Boardman, Anthony & Vertinsky, Ilan & Whistler, Diana, 1997. "Using information diffusion models to estimate the impacts of regulatory events on publicly traded firms," Journal of Public Economics, Elsevier, vol. 63(2), pages 283-300, January.
    6. Brown, Stephen J. & Warner, Jerold B., 1980. "Measuring security price performance," Journal of Financial Economics, Elsevier, vol. 8(3), pages 205-258, September.
    7. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
    8. Fama, Eugene F, 1991. " Efficient Capital Markets: II," Journal of Finance, American Finance Association, vol. 46(5), pages 1575-1617, December.
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    Cited by:

    1. Daowei Zhang & Xing Sun & Brett J. Butler & Jeffrey P. Prestemon, 2015. "Harvesting Choices and Timber Supply among Landowners in the Southern United States," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 63(3), pages 409-429, September.
    2. Sun, Changyou, 2013. "Price variation and volume dynamics of securitized timberlands," Forest Policy and Economics, Elsevier, vol. 27(C), pages 44-53.
    3. Piao, Xiaorui & Mei, Bin & Zhang, Weiyi, 2017. "Long-term event study of timber real estate investment trust conversions," Forest Policy and Economics, Elsevier, vol. 78(C), pages 1-9.
    4. Sun, Changyou & Rahman, Mohammad M. & Munn, Ian A., 2013. "Adjustment of stock prices and volatility to changes in industrial timberland ownership," Forest Policy and Economics, Elsevier, vol. 26(C), pages 91-101.

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