HCBE Faculty Articles
Title
Motives for and Effects of Asset Revaluation: An Examination of South Korean Data
Document Type
Article
Publication Date
2016
Publication Title
Emerging Markets Finance and Trade
ISSN or ISBN
1540-496X
Volume
52
Issue/Number
12
First Page
2808
Last Page
2817
Abstract/Excerpt
Examining a sample of South Korean firms, of which 201 revalued assets and 899 did not during the period 2008–2009, we find that the average debt cost, equity cost, and weighted average cost of capital (WACC) are higher among the firms that revalued. Firms with higher equity costs and leverage are more likely to revalue and the propensity has a negative relationship with profitability, cash flow, and Tobin’s q. Firms that engage in revaluation experience reductions in all capital costs from year −1 to +1, comparable to those among firms that did not revalue. Our results support both the information hypothesis and the debt-cost hypothesis.
DOI
10.1080/1540496X.2016.1209360
NSUWorks Citation
Baek, Hyungkee Young and Lee, Dong Young, "Motives for and Effects of Asset Revaluation: An Examination of South Korean Data" (2016). HCBE Faculty Articles. 795.
https://nsuworks.nova.edu/hcbe_facarticles/795
