Divestitures, Wealth Effects and Corporate Governance
Sian A. Owen
University of New South Wales (UNSW) - School of Banking and Finance; Financial Research Network (FIRN)
University of New South Wales (UNSW) - School of Banking and Finance
City University London - Sir John Cass Business School; University of Adelaide Business School
Accounting & Finance, Vol. 50, No. 2, pp. 389-415, June 2010
We analyse the market reaction to divestiture decisions and determine the impact of corporate governance practices. We find the market reaction is significant and can be determined using internal governance mechanisms. We evaluate the determinants of the decision to sell using a control sample of firms displaying characteristics often associated with divestitures indicating that these firms may face the same incentives to divest but elect not to restructure in this manner. Our results suggest that a combination of strong internal and external governance may force managers to act in a manner that is incompatible with their personal desires.
Number of Pages in PDF File: 27Accepted Paper Series
Date posted: June 4, 2010
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