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Additional Evidence on the Relation Between Divestiture Announcements and Shareholder Wealth
Author(s) -
ROSENFELD JAMES D.
Publication year - 1984
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.1984.tb04916.x
Subject(s) - divestment , shareholder , database transaction , business , stock (firearms) , monetary economics , shareholder value , spin offs , value (mathematics) , event study , financial economics , accounting , corporate governance , economics , finance , industrial organization , mechanical engineering , paleontology , context (archaeology) , machine learning , biology , computer science , engineering , programming language
This paper presents estimates of the effect of voluntary divestiture announcements on shareholder wealth. The results show that both spin‐off and sell‐off announcements tend to have a positive influence on the stock prices of the divesting firms, and that the spin‐offs “outperform” the sell‐offs on the day of the event. We also find that the economic gains to the shareholders of the selling and acquiring firms are nearly identical, suggesting that the sell‐off decision is perceived by both investor groups as a positive net present value (NPV) transaction.