Title: Acquisition of Divested Assets and Shareholders' Wealth
Abstract: The Journal of FinanceVolume 42, Issue 5 p. 1261-1273 Article Acquisition of Divested Assets and Shareholders' Wealth NEIL W. SICHERMAN, NEIL W. SICHERMANSearch for more papers by this authorRICHARD H. PETTWAY, RICHARD H. PETTWAYCollege of Business, University of South Carolina and College of Business, University of Missouri at Columbia, respectively. This paper was begun when both authors were at the University of Florida.Search for more papers by this author NEIL W. SICHERMAN, NEIL W. SICHERMANSearch for more papers by this authorRICHARD H. PETTWAY, RICHARD H. PETTWAYCollege of Business, University of South Carolina and College of Business, University of Missouri at Columbia, respectively. This paper was begun when both authors were at the University of Florida.Search for more papers by this author First published: December 1987 https://doi.org/10.1111/j.1540-6261.1987.tb04365.xCitations: 62 Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onEmailFacebookTwitterLinkedInRedditWechat ABSTRACT The divesting of corporate assets has become quite popular. Previous studies of divestitures have found conflicting impacts upon shareholders' wealth of the buying firm. This study measures the impacts of product-line relatedness between the acquiring firm and the divested unit and financial weakness of the selling firm upon the abnormal returns to the acquiring firm. Although the study finds that the impact of financial strength of the seller is ambiguous, the purchase of related assets produces more wealth than does the purchase of unrelated divested units. Further, firms that purchase related divested units have larger proportions of insider ownership. REFERENCES 1G. Alexander, G. Benson, and J. Kampmeyer. "Investigating the Valuation Effects of Announcement of Voluntary Divestitures." Journal of Finance 39 (June 1984), 503–17. 10.1111/j.1540-6261.1984.tb02323.x Web of Science®Google Scholar 2Y. Amihud and B. Lev. "Risk Reduction as a Managerial Motive for Conglomerate Mergers." Bell Journal of Economics 12 (Autumn 1981), 605–17. 10.2307/3003575 Web of Science®Google Scholar 3M. Ben-Horim and H. Levy. Statistics: Decisions and Applications in Business and Economics. New York: Random House, 1981. Google Scholar 4S. Brown and J. Warner. "Using Daily Stock Returns: The Case of Event Studies." Journal of Financial Economics 14 (March 1985), 3–31. 10.1016/0304-405X(85)90042-X PubMedWeb of Science®Google Scholar 5T. E. Copeland and J. F. Weston. Financial Theory and Corporate Policy. Reading, MA: Addison-Wesley, 1983. Google Scholar 6P. C. Jain. "The Effect of Voluntary Sell-Off Announcements on Shareholder Wealth." Journal of Finance 40 (March 1985), 209–24. 10.1111/j.1540-6261.1985.tb04945.x Web of Science®Google Scholar 7A. Klein. "The Timing and Substance of Divestiture Announcements: Individual, Simultaneous and Cumulative Effects." Journal of Finance 41 (July 1986), 685–96. 10.1111/j.1540-6261.1986.tb04532.x Web of Science®Google Scholar 8J. A. Miles and J. D. Rosenfeld. "The Effect of Voluntary Spin-Off Announcements on Shareholder Weath." Journal of Finance 38 (December 1983), 1597–1606. 10.1111/j.1540-6261.1983.tb03843.x Web of Science®Google Scholar 9S. Myers. "Procedures for Capital Budgeting under Uncertainty." Industrial Management Review 9 (Spring 1968), 1–20. Web of Science®Google Scholar 10R. H. Pettway. "On the Use of Beta in Regulatory Proceedings: An Empirical Examination." Bell Journal of Economics 9 (Spring 1978), 239–48. Web of Science®Google Scholar 11J. D. Rosenfeld. "Additional Evidence on the Relation between Divestiture Announcements and Shareholder Wealth." Journal of Finance 39 (December 1984), 1437–48. 10.1111/j.1540-6261.1984.tb04916.x Web of Science®Google Scholar 12R. P. Rumelt. Strategy, Structure, and Economic Performance. Boston: Division of Research, Graduate School of Business Administration, Harvard University, 1974. Google Scholar 13S. Siegel. Nonparametric Statistics for the Behavioral Sciences. New York: McGraw-Hill Book Company, 1956. Google Scholar 14S. Toy. "Splitting Up: The Other Side of Merger Mania." Business Week 290–1 (July 1, 1985), 50–55. Google Scholar 15J. K. Zaima and D. Hearth. "The Wealth Effects of Voluntary Selloffs: Implications for Divesting and Acquiring Firms." Journal of Financial Research 8 (Fall 1985), 227–36. 10.1111/j.1475-6803.1985.tb00405.x Web of Science®Google Scholar Citing Literature Volume42, Issue5December 1987Pages 1261-1273 ReferencesRelatedInformation
Publication Year: 1987
Publication Date: 1987-12-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 26
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