The role of firm performance in the market rcaetion to divestiture announcements

Nguyen, P

The role of firm performance in the market rcaetion to divestiture announcements

Nguyen, P

Permalink

Publication Type:: Journal Article
Citation:: Economics Bulletin, 2013, 33 (3), pp. 1723 - 1728
Issue Date:: 2013-11-11

Open Access

Copyright Clearance Process

Recently Added
In Progress
Open Access

This item is open access.

Adobe PDF

Download full textAdobe PDF (110.2 kB)

View statistics

Full metadata record

Field	Value	Language
dc.contributor.author	Nguyen, P	en_US
dc.date.issued	2013-11-11	en_US
dc.identifier.citation	Economics Bulletin, 2013, 33 (3), pp. 1723 - 1728	en_US
dc.identifier.uri	http://hdl.handle.net/10453/27706
dc.description.abstract	Divestitures have the potential to create shareholder value. However, the magnitude of the wealth effect depends on the likelihood of finding more valuable uses for the divested assets and the seller's ability to eliminate negative synergies. Strong performers should have less scope to benefit compared to poor performers. Using lagged excess returns as a proxy for such opportunities, we show that the market reaction to divestiture announcements is significantly higher for underperforming firms.	en_US
dc.relation.ispartof	Economics Bulletin	en_US
dc.subject.classification	Economics	en_US
dc.title	The role of firm performance in the market rcaetion to divestiture announcements	en_US
dc.type	Journal Article
utslib.citation.volume	3	en_US
utslib.citation.volume	33	en_US
utslib.for	1402 Applied Economics	en_US
utslib.for	14 Economics	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/Strength - CCG - Centre for Corporate Governance
utslib.copyright.status	open_access
pubs.issue	3	en_US
pubs.publication-status	Published	en_US
pubs.volume	33	en_US

Abstract:

Divestitures have the potential to create shareholder value. However, the magnitude of the wealth effect depends on the likelihood of finding more valuable uses for the divested assets and the seller's ability to eliminate negative synergies. Strong performers should have less scope to benefit compared to poor performers. Using lagged excess returns as a proxy for such opportunities, we show that the market reaction to divestiture announcements is significantly higher for underperforming firms.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/27706