Asset stripping
Encyclopedia
Asset stripping involves selling the asset
s of a business individually at a profit. The term is generally used in a pejorative
sense as such activity is not considered productive to the economy. Asset stripping is considered to be a problem in economies such as Russia
or China
that are making a transition to the market. In these situations, managers of a state-owned company have been known to sell the assets which they control, leaving behind nothing but debts to the state.
A fictional example of asset stripping can be found in the 1987 film Wall Street. In this film, the ruthless investor Gordon Gekko
, played by Michael Douglas
, purchases the failing airline Blue Star, under the pretense that he will restructure the company and return it to profitability. However, we later learn that he intends to liquidate all of the company's assets.
Asset
In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...
s of a business individually at a profit. The term is generally used in a pejorative
Pejorative
Pejoratives , including name slurs, are words or grammatical forms that connote negativity and express contempt or distaste. A term can be regarded as pejorative in some social groups but not in others, e.g., hacker is a term used for computer criminals as well as quick and clever computer experts...
sense as such activity is not considered productive to the economy. Asset stripping is considered to be a problem in economies such as Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
or China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
that are making a transition to the market. In these situations, managers of a state-owned company have been known to sell the assets which they control, leaving behind nothing but debts to the state.
A fictional example of asset stripping can be found in the 1987 film Wall Street. In this film, the ruthless investor Gordon Gekko
Gordon Gekko
Gordon Gekko is the main antagonist of the 1987 film Wall Street and the antihero of the 2010 film Wall Street: Money Never Sleeps, both by director Oliver Stone...
, played by Michael Douglas
Michael Douglas
Michael Kirk Douglas is an American actor and producer, primarily in movies and television. He has won three Golden Globes and two Academy Awards; first as producer of 1975's Best Picture, One Flew Over the Cuckoo's Nest, and as Best Actor in 1987 for his role in Wall Street. Douglas received the...
, purchases the failing airline Blue Star, under the pretense that he will restructure the company and return it to profitability. However, we later learn that he intends to liquidate all of the company's assets.