IMPACT OF DIVESTITURE ACTIVITIES ON CORPORATE PERFORMANCE: EVIDENCE FROM LISTED FIRMS IN TAIWAN

Meijui Sun

The International Journal of Business and Finance Research, 2012, vol. 6, issue 2, 59-67

Abstract: This study examines how divesture affects the performance of listed companies in Taiwan. Divestiture describes firms selling their assets, production lines, subsidiaries or other segments for either cash or securities. This study focuses on two types of divestiture activities: sell-offs and equity carve-outs. Specifically, this work employs a control group design to examine 266 sell-off and equity carve-out announcements between 1995 and 2004, and measures the short-term abnormal stock returns and long-term (5 years) operating performance using financial ratios. The analytical results show significant positive stock abnormal returns associated with divestiture announcements for listed companies in Taiwan. Furthermore, firms generally experienced enhanced performance after undertaking divestiture activities.

Keywords: Divestiture; Sell-offs; Equity carve-outs; Event study; Taiwan (search for similar items in EconPapers)
JEL-codes: G14 G34 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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