The Impact of Divestment on Firm Performance: Empirical Evidence from a Panel of UK Companies |
| |
| Authors: | Michelle Haynes,Steve Thompson,& Mike Wright |
| |
| Affiliation: | Department of Economics, University of Warwick, UK;, Department of Economics, University of Leicester, UK;, Centre for Management Buy-out Research, University of Nottingham, UK |
| |
| Abstract: | It has widely been suggested that during the 1980s many diversified firms narrowed the scope of their activities by refocusing on core businesses, primarily through divestment activity. This study examines the impact of divestment on firm performance, using an unbalanced panel of 132 UK quoted companies over the period 1985 to 1993. The results suggest that divestment has a positive, significant and substantial effect in raising the profitability of the vendor company. We find limited support for the view that the benefit from divestment is greater for larger and/or more diversified firms and firms operating with weak governance arrangements. |
| |
| Keywords: | |
|
|
