Publication Type

Journal Article

Publication Date

3-2005

Abstract

This paper discusses the different forms of corporate divestitures, the motives for this corporate activity, and the empirical findings about their economic outcomes. A sample of corporate divestitures is also used to identify the main motivations in the Singapore context. We conclude that divestitures are carried out to achieve operational efficiency and gain incremental profitability and liquidity. Using share price data around the event-dates, we show that announcements of divestitures generally lead to significant increases in the returns of the parent company. The positive abnormal returns are related to the relative size of the divestitures and the computed accounting gains. Overall, corporate divestiture is a value-increasing activity for Singapore companies.

Keywords

Spinoffs, divestitures, Singapore

Discipline

Asian Studies | Finance and Financial Management | Portfolio and Security Analysis

Research Areas

Finance; Applied Microeconomics

Publication

Journal of Restructuring Finance

Volume

2

Issue

1

First Page

69

Last Page

79

ISSN

0219-869X

Identifier

10.1142/S0219869X05000191

Publisher

World Scientific

Additional URL

http://dx.doi.org/10.1142/S0219869X05000191

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