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Value creation through corporate restructuring: European divestitures

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  • Kaiser, Kevin
  • Stouraitis, Aris

Abstract

Kevin Kaiser and Aris Stouraitis present preliminary evidence on stock market reaction to divestiture announcements by European firms. Included in their sample are divestitures by French, German, Swedish and UK firms. Their findings include: (1) stock price reaction during initial announcements of domestic subsidiary sell-offs is positive and consistent (in size and direction) with the US evidence, (2) in contrast to evidence for sellers in the US, the European evidence indicates that seller performance improves substantially for the 60 trading days following the event, (3) there appear to be substantial information leakages in Continental European countries many trading days prior to the initial announcement of the event to the Press, (4) there appear to be differences across countries in the way cumulative abnormal returns are distributed between sellers divesting domestic subsidiaries (positive effect) and sellers divesting foreign subsidiaries (ambiguous effect), and (5) the relative size of the divested unit explains a considerable portion of the variation in stock-price effects across firms.

Suggested Citation

  • Kaiser, Kevin & Stouraitis, Aris, 1995. "Value creation through corporate restructuring: European divestitures," European Management Journal, Elsevier, vol. 13(2), pages 164-174, June.
  • Handle: RePEc:eee:eurman:v:13:y:1995:i:2:p:164-174
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    Cited by:

    1. Mary Rose Cooney & Frank Finn & Angela Karl, 2004. "Australian Divestiture Activity: An Examination of Gains to Sell-Off Announcements," Australian Journal of Management, Australian School of Business, vol. 29(1_suppl), pages 135-151, June.
    2. Benou, Georgina & Madura, Jeff & Ngo, Thanh, 2008. "Wealth creation from high-tech divestitures," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(3), pages 505-519, August.
    3. Pascal Barneto, 2003. "La scission d'Eridania-Béghin-Say:essai d'évaluation par un modèle d'options réelles," Revue Finance Contrôle Stratégie, revues.org, vol. 6(2), pages 5-42, June.
    4. Meijui Sun, 2012. "Impact Of Divestiture Activities On Corporate Performance: Evidence From Listed Firms In Taiwan," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 6(2), pages 59-67.

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