Divestment on the stock markets: A sign of low opportunity industry?

Jean-Gabriel Cousin (), Sébastien Dereeper () and Asad Iqbal Mashwani
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Jean-Gabriel Cousin: LUMEN - Lille University Management Lab - ULR 4999 - Université de Lille
Sébastien Dereeper: CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon, SKEMA Business School - SKEMA Business School
Asad Iqbal Mashwani: EDC - EDC Paris Business School

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Abstract: the firm-level impact of divestments. We take this discussion to the industry level and argue that, on average, divestments are carried out in industries where opportunities are low. These industries have low operating performance (gauged by capital expenditures, cash flow, sales growth, asset growth, profit margin, market-to-book value, and research and development) compared to industries where there are no divestments. In addition to this evidence, we find that in merger and acquisition activities where the target is in industries where divestments occurred in the last three pre-event years, bidders created less value compared to mergers where the target industry had no divestments. Both the low operating performance of industries post-divestments and the low value created by bidders targeting industries where divestments occurred signal that industries where divestments take place have low opportunities ahead. This also implies that corporate change can be interpreted as a signal for industrial change.

Keywords: Corporate change; Industrial change; Divestitures; Equity carve-outs (IPOs); Mergers and acquisitions; capital restructuring (search for similar items in EconPapers)
Date: 2026
Note: View the original document on HAL open archive server: https://hal.science/hal-05483789v1
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Published in International Journal of Banking, Accounting and Finance, inPress

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