Ownership structure and divestiture decisions: Evidence from Australian firms

Nguyen, P; Rahman, N; Zhao, R

Ownership structure and divestiture decisions: Evidence from Australian firms

Nguyen, P Rahman, N

Zhao, R

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Publication Type:: Journal Article
Citation:: International Review of Financial Analysis, 2013, 30 pp. 170 - 181
Issue Date:: 2013-12-01

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Field	Value	Language
dc.contributor.author	Nguyen, P	en_US
dc.contributor.author	Rahman, N https://orcid.org/0000-0002-8251-7796	en_US
dc.contributor.author	Zhao, R https://orcid.org/0000-0002-1223-3333	en_US
dc.date.issued	2013-12-01	en_US
dc.identifier.citation	International Review of Financial Analysis, 2013, 30 pp. 170 - 181	en_US
dc.identifier.issn	1057-5219	en_US
dc.identifier.uri	http://hdl.handle.net/10453/27354
dc.description.abstract	Divestitures create shareholder value by helping firms to optimize their portfolio of assets. However, firms may forego value enhancing divestitures because of agency problems. More specifically, large controlling shareholders may prefer to retain the assets in order to extract private benefits of control at the expense of minority shareholders. In this paper, we explore the role that other blockholders play in constraining the largest shareholder's influence. The results indicate that divestiture activity decreases with the ownership of the largest shareholder. The presence of another significant blockholder appears to curb this negative bias towards divestitures. Our findings provide an economic rationale for the higher performance of firms characterized by more balanced ownership structures. Involvement of family owners also appears to provide similar benefits. © 2013 Elsevier Inc.	en_US
dc.relation.ispartof	International Review of Financial Analysis	en_US
dc.relation.isbasedon	10.1016/j.irfa.2013.08.003	en_US
dc.subject.classification	Finance	en_US
dc.title	Ownership structure and divestiture decisions: Evidence from Australian firms	en_US
dc.type	Journal Article
utslib.citation.volume	30	en_US
utslib.for	1502 Banking, Finance and Investment	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
utslib.for	1801 Law	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Finance Discipline
pubs.organisational-group	/University of Technology Sydney/Strength - CCG - Centre for Corporate Governance
utslib.copyright.status	closed_access
pubs.publication-status	Published	en_US
pubs.volume	30	en_US

Abstract:

Divestitures create shareholder value by helping firms to optimize their portfolio of assets. However, firms may forego value enhancing divestitures because of agency problems. More specifically, large controlling shareholders may prefer to retain the assets in order to extract private benefits of control at the expense of minority shareholders. In this paper, we explore the role that other blockholders play in constraining the largest shareholder's influence. The results indicate that divestiture activity decreases with the ownership of the largest shareholder. The presence of another significant blockholder appears to curb this negative bias towards divestitures. Our findings provide an economic rationale for the higher performance of firms characterized by more balanced ownership structures. Involvement of family owners also appears to provide similar benefits. © 2013 Elsevier Inc.

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http://hdl.handle.net/10453/27354