search query: @indexterm DIVERSIFICATION / total: 686
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| Author: | Dittmar, A. Shivdasani, A. |
| Title: | Divestitures and divisional investment policies |
| Journal: | Journal of Finance
2003 : DEC, VOL. 58:6, p. 2711-2743 |
| Index terms: | Divestment Investment Diversification |
| Language: | eng |
| Abstract: | The authors 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. The authors 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. The results support the corporate focus and financing hypotheses for corporate divestitures. The authos demonstrate that inefficient investment is partly responsible for the diversification discount and show that asset sales lead to an improvement in the efficiency of investment for remaining divisions. |
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