The Bright Side of Fire Sales

The Bright Side of Fire Sales

Jean-Marie Meier, Henri Servaes

Series number :

Serial Number: 

Date posted :

August 15 2014

Last revised :

November 14 2018
SSRN Share


  • fire sales • 
  • mergers and acquisitions • 
  • Distress • 
  • Bankruptcy • 
  • restructuring • 
  • Bailouts

Firms that buy assets in fire sales earn excess returns that are two percentage points higher than in regular acquisitions. The mechanism behind this result is the reduced bargaining power of the seller.

We find no difference in real effects or in the combined returns for buyers and sellers between fire sales and regular acquisitions, suggesting that the quality of the match is similar in both types of transactions. The externalities of fire sales for other stakeholders are limited. These results indicate that the welfare losses associated with fire sales are smaller than previously thought.


Real name:
Jean-Marie Meier