A Unified Model of Corporate Acquisitions and Divestitures

Posted: 23 Aug 1998

See all articles by Yoon K. Choi

Yoon K. Choi

University of Central Florida - College of Business Administration - Department of Finance

Larry J. Merville

University of Texas at Dallas

Abstract

The purpose of this paper is to unify corporate acquisitions and divestitures (e.g., spin-offs, equity carve-outs and sell-offs) into a simple comprehensive agency model where risk and synergy (positive or negative) interact to determine an optimal corporate governance and stock-based incentive compensation. Our model explains empirical evidence regarding corporate acquisitions and divestitures and also motivates some new emprical hypotheses about the nature of stock-based compensation in spin-offs and equity carve-outs.

JEL Classification: G34, D82

Suggested Citation

Choi, Yoon K. and Merville, Larry J., A Unified Model of Corporate Acquisitions and Divestitures. Available at SSRN: https://ssrn.com/abstract=6788

Yoon K. Choi

University of Central Florida - College of Business Administration - Department of Finance ( email )

PO Box 161400
Orlando, FL 32816
United States
(407) 823-5023 (Phone)

Larry J. Merville (Contact Author)

University of Texas at Dallas ( email )

2601 North Floyd Road
P.O. Box 830688
Richardson, TX 75083
United States
214-883-2711 (Phone)
214-883-2799 (Fax)

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