Divesting assets owned in emerging markets has substantive consequences for the multinational corporation. We examine two dimensions surrounding the decision to divest a business in an emerging market: institutional effects impacting the timing of the divestiture, and the effects of the ownership structure on the stability of the venture. Also, we explore the consequences of divestment on the sale price of the assets. We use a proprietary database of all acquisitions in Argentina (>US$1 mill.) for the period 1990-2002 to test our hypotheses. Our evidence supports the existence of institutional and ownership effects on the propensity to divest, which in turn affect the divestiture price.
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Paper provided by Instituto de Empresa, Area of Economic Environment in its series Working Papers Economia with number
wp06-05.