Divestiture announcements in Australia : causes and consequences
澳大利亞上市公司的資產重組公告 : 原因與後果
Student thesis: Doctoral Thesis
Related Research Unit(s)
This study examines 663 divestiture announcements in Australia from 1987 to 1997. Such Australian data allow independent tests of numerous hypotheses documented in comparable studies on U.S. data. Valuation effects in response to such announcements are consistently, however weakly, positive for both the divesting parents and the acquiring firms. Different causes and motives to divest are investigated. Empirical results support that high leverage, poor prior performance, low profitability, and increasing geographic focus are likely causes for management to divest, and lead to positive market reaction. Findings are consistent with both the financial distress and the bankruptcy avoidance hypotheses documented in the corporate restructuring literature. For long-term consequences, empirical evidence suggests that divestitures present viable and prevalent tools for firms to restructure in response to a decline in operating performance. Firms that adopt divestitures following years of deterioration, such as increasing leverage, decreasing performance and decreasing profitability, could experience some sort of turnarounds in the years following the operational actions. As for the acquiring firms, market reaction indicates that acquiring for synergistic gains, both geographically and industry-wise, are more justifiable acquisitions than those acquiring a target unlikely to yield synergistic gains. In many ways, this study reassures the effectiveness of divestitures and the importance of business similarity and geographic proximity in corporate restructuring considerations.
- Australia, Corporate reorganizations, Corporate divestiture