Corporate Divestitures and Spinoffs in Singapore

25 Pages Posted: 29 Dec 2004

See all articles by Francis Koh

Francis Koh

Singapore Management University - Lee Kong Chian School of Business

Winston T.H. Koh

Singapore Management University - School of Social Sciences

Benedict S. Koh

Singapore Management University - Lee Kong Chian School of Business

Date Written: June 2004

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, 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

JEL Classification: G34

Suggested Citation

Koh, Francis and Koh, Winston T.H. and Koh, Benedict S., Corporate Divestitures and Spinoffs in Singapore (June 2004). Available at SSRN: https://ssrn.com/abstract=637403 or http://dx.doi.org/10.2139/ssrn.637403

Francis Koh

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Federal Building #02-05
Singapore 912409
Singapore

Winston T.H. Koh (Contact Author)

Singapore Management University - School of Social Sciences ( email )

469 Bukit Timah Road
Federal Building #02-08
Singapore, 259756
Singapore
+65 6822 0853 (Phone)
+65 6822 0833 (Fax)

Benedict S. Koh

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

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