Publication Type

Conference Paper

Publication Date



This paper investigates how CEO characteristics affect firm value through divestiture. Using a novel dataset tracking CEO’s career path, from which CEO’s talent and expertise are reasonably inferred, I find when CEOs have differing abilities across divisions of conglomerates, they more likely divest divisions that they are less qualified to manage, and focus on divisions of better match with their talents and expertise. The better match of their talents with firms’ retained assets is the source of value creation from refocusing divestiture. Divestitures that increase corporate focus but not improve the talent-asset match do not create value in long run. The results are robust to controlling various factors that may affect firms’ divestiture decisions. This study adds a new perspective to the growing literature that managerial characteristics matter for corporate policy decisions and performance.


Corporate Finance | Finance and Financial Management | Human Resources Management

Research Areas



Financial Management Association Annual Meeting, Grapevine, 8-11 October 2008

City or Country

Grapevine, TX, USA