Structure, motives, and performance effects of divestitures

When firms divest to reconfigure their portfolio of businesses, they separate businesses or assets from their firm through sell-offs, spin-offs, equity carve-outs, or split-ups. Divestitures are complex events, structured in diverse ways, undertaken for manifold motives, and ultimately affect the future performance of the divesting firm. While their causes and consequences have been well-examined in literature, research gaps remain. This dissertation undertakes three comprehensive studies to resolve existing research gaps concerning the structure, motives, and performance effects of divestitures. The first study seeks to further differentiate research by considering the role of motive and structure when examining the effects of divestiture and divestiture experience on post-divestiture accounting performance. It specifically examines the effects of sell-offs in general, sell-offs driven by a strategic motive, and sell-offs structured as part of a divestiture program. The second study acknowledges the diversity of divestitures and undertakes an in-depth exploration of divestiture programs. It describes their nature, examines when firms announce such programs in contrast to stand-alone divestitures, and measures how the market reacts to their announcement. The third study provides evidence from a consolidating industry where players usually seek efficiency gains and growth through mergers and acquisitions. The study is set in the global brewing industry, where the five largest players accounted for 60% of the global volume in 2018. It analyzes the market reaction to divestitures and its determinants.