Divestitures and Divisional Investment Policies

  title={Divestitures and Divisional Investment Policies},
  author={A. Dittmar and A. Shivdasani},
  journal={IO: Firm Structure},
  • A. Dittmar, A. Shivdasani
  • Published 2002
  • Business
  • IO: Firm Structure
  • We study a sample of diversified firms that alter their organizational structure by divesting a business segment. These firms experience a reduction in the diversification discount after the divestiture. We show that the efficiency of segment investment increases substantially following the divestiture and that this improvement is associated with a decrease in the diversification discount. Our results support the corporate focus and financing hypotheses for corporate divestitures. We… CONTINUE READING
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