Performance effects of sell-offs and the role of sell-off experience

Ludwig Sebastian Erl, Florian Kiesel, Dirk Schiereck and Markus Koenigsmarck

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: Divestitures are complex events undertaken for various motives and structured in multiple ways. This paper analyzes the long-term effects of sell-offs and sell-off experience on firm performance considering divestiture programs (divestitures using multiple sell-offs, having strategic intent and divestitures explicitly linked to a strategic reorientation). Our analysis reveals a positive effect of sell-offs structured as a divestiture program. However, the results suggest that in the context of such programs, potential learning transfers are outweighed by a negative performance associated with years of restructuring or inherent to firms undergoing a program. This paper contributes to the knowledge on performance effects of divestiture experience and provides evidence of the importance of programs.

Date: 2023-02
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Published in The Quarterly Review of Economics and Finance (2023-02) : pp. 244-257

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Persistent link: https://EconPapers.repec.org/RePEc:dar:wpaper:142305

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