This project examines divestiture announcements in Australia from 1987 to 1997. Valuation effects in response to such announcements are consistently, however weakly, positive for both the divesting parents and the acquiring firms. Different causes and motives to divest are investigated….
Chapter 1: Introduction
Chapter 2: A Survey of Divestment Causes, Decisions, and Consequences
2.1 Asset Sales (sell-offs)
2.2 Valuation Effects in Response to Sell-offs
2.3 Hypotheses Behind Sell-offs
2.3.1 Diversification Reversal – The Effects of Diversification on Firm Value
2.3.2 Diversification Reversal – The Principles
2.3.3 Diversification Reversal – The Barriers and Costs
2.3.4 Hostile Bust-up Takeovers, Voluntary Restructuring, and Previous Acquisitions
2.3.5 International Diversification and Geographic Refocus
2.3.6 Financial Distress and Leverage-related Motives
2.3.7 Divesting Underperforming Assets
2.3.8 Agency Costs of Managerial Discretion
2.3.9 Solutions to Agency Costs
2.3.10 Profitability of Sell-offs
2.3.11 Non-voluntary Reasons
2.4 Other Forms of Divestiture
2.4.1 Spin-offs
2.4.2 Equity Carve-outs and Seasoned Equity Offerings
2.4.3 Management Buyouts
2.4.4 Others
2.5 Long-term Performance Improvement Following Sell-offs
2.6 Acquiring Firms
2.6.1 Synergistic Gains Between Two Parties
Chapter 3: The Study: Data, Methodology and Hypotheses
3.1 Data
3.2 Abnormal Returns
3.3 Variables
3.4 Research Questions and Hypotheses
Chapter 4: Divestiture Announcements and Valuation Effects
4.1 The Cumulative Abnormal Returns of the Parent Companies
4.1.1 Figures and Tests
4.1.2 The Different Samples and Discussions
4.2 Preliminary Univariate Analyses
4.2.1 Leverage – Different Definitions
4.2.2 Poor Prior Performance
4.2.3 Negative Synergy and the Dissimilarity of the Parent and Target
4.2.4 Other Hypotheses
Chapter 5: Cross-sectional Regression Analyses of Abnormal Returns
5.1 Specific Models
5.1.1 Leverage and Operating Performance
5.1.2 Refocusing
5.1.3 Information Revelation
5.1.4 Transaction Type
5.2 Full Models
Chapter 6: Corporate Restructuring for Operating Performance Turnaround
6.1 Deterioration Year
6.2 Overview of Three Samples with Deteriorating Performance
6.3 Timing and Effectiveness of Operational Actions
6.3.1 Comparisons of Different Time Spans
6.3.2 Deterioration and Improvement or Pause in Deterioration
6.4 Logit Regressions – Probabilities of Refocusing Geographically and Recording a Positive Net Profit
6.4.1 Increasing Geographic Focus (Logit Models)
6.4.2 Net Profit (Logit Models)
6.5 Performance Turnarounds …..
Source: City University of Hong Kong
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