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- Title
Acquisition of Divested Assets and Shareholders' Wealth.
- Authors
SICHERMAN, NEIL W.; PETTWAY, RICHARD H.
- 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.
- Subjects
CORPORATE divestiture; MERGERS &; acquisitions; ECONOMIC impact; STOCKHOLDER wealth; ASSET management; CORPORATE reorganizations; STOCK ownership; RATE of return; DISINVESTMENT; ORGANIZATIONAL change; ECONOMIC aspects of decision making; SALE of business enterprises; DIVERSIFICATION in industry; ECONOMICS; MANAGEMENT
- Publication
Journal of Finance (Wiley-Blackwell), 1987, Vol 42, Issue 5, p1261
- ISSN
0022-1082
- Publication type
Article
- DOI
10.1111/j.1540-6261.1987.tb04365.x