Voluntary Divestitures and the Choice Between Sell‐Offs and Spin‐Offs

Financial Review - Tập 31 Số 4 - Trang 885-912 - 1996
A. Qayyum Khan1, Dileep R. Mehta2
1University of Bridgeport, Bridgeport, Connecticut 06601
2Georgia State University, Atlanta, Georgia, 30303

Tóm tắt

AbstractA voluntary divestiture may either be a sell‐off or a spin‐off. In a sell‐off, the divesting firm receives cash (or cash equivalents) and gives up ownership and control of the divested asset. In a spin‐off, the divested asset becomes an independent entity under a new management but ownership remains with the old stockholders of the original firm. The study investigates the divestiture decision and the choice between sell‐offs and spin‐offs by constructing a model of the multi‐divisional firm. The results show that firms undertake voluntary divestitures because of low marginal return coupled with high joint operating and financial costs. The form of the divestiture is determined by the operating risk of the division being divested. The implications of the model are empirically tested for the period 1969–87 and the results support the postulates of the model.

Từ khóa


Tài liệu tham khảo

10.2307/1879431

Aldrich John, 1989, Linear Probability Logit and Probit Models

10.1111/j.1540-6261.1984.tb02323.x

10.2307/2330610

Dillion William, 1984, Multivariate Analysis Methods and Applications

Donaldson Gordon, 1969, Strategy for Financial Emergencies, Harvard Business Review, 47, 117

10.1016/0304-405X(76)90020-9

Green Paul, 1978, Analyzing Multivariate Data

10.1016/0378-4266(87)90040-9

10.1111/j.1540-6261.1969.tb00339.x

10.2307/3665119

10.1016/0304-405X(83)90042-9

Jain Prem., 1985, The Effect of Voluntary Sell‐off Announcement on Shareholder Wealth, Journal of Finance, 30, 209

10.1111/j.1540-6261.1978.tb03388.x

10.1111/j.1540-6261.1986.tb04532.x

Kudla Ronald, 1983, Valuation Consequences of Corporate Spin‐offs, Review of Business and Economics, 19, 72

Masulis Ronald, 1988, The Debt Equity Choice

10.1111/j.1540-6261.1983.tb03843.x

10.1111/j.1540-6261.1977.tb03267.x

10.2307/255881

10.2307/2098055

Myers Stuart.Determinants of Corporate Borrowing.Journal of Financial Economics(November 1977):147–76.

10.1080/00036849000000038

Ravenscraft David, 1987, Mergers, Sell‐offs, and Economic Activity

10.1111/j.1540-6261.1984.tb04916.x

10.1016/0304-405X(83)90043-0

10.2307/3003189

10.1111/j.1540-6261.1987.tb04365.x

10.1111/j.1540-6261.1987.tb03920.x

10.1016/0304-405X(77)90002-2

10.1086/259258

Thông tin
Thông tin xuất bản

Financial Review

Tập 31 Số 4

885-912

Thông tin tác giả