Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/330725 
Year of Publication: 
2024
Citation: 
[Journal:] Review of Managerial Science [ISSN:] 1863-6691 [Volume:] 19 [Issue:] 9 [Publisher:] Springer [Place:] Berlin, Heidelberg [Year:] 2024 [Pages:] 2729-2773
Publisher: 
Springer, Berlin, Heidelberg
Abstract: 
Single divestitures can adjust a firm's strategy, while divestiture programs, a series of divestitures with a common rationale, may considerably change a firm's business. However, this does not always imply a positive impact. Existing evidence on how capital markets evaluate these decisions lacks validation based on the firm's strategic background. This paper fills this gap by examining stock market reactions to divestiture program announcements, conditional on the firm's current situation. We explore five key antecedents likely to influence divestiture program decisions: CEO turnover, new blockholder, financial distress, prior divestiture experience, and industry divestiture waves. Examining more than 100 European firms and their divestiture disclosures, our results show that firms announce divestiture programs when financially distressed or after a change in the top management. Market reactions vary but are more positive when program value is disclosed, especially for financially driven programs or those programs which are part of broader restructuring initiatives.
Subjects: 
Divestiture programs
Management turnover
Financial distress
Signaling
JEL: 
G14
G32
G34
L25
M10
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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