La creazione di valore nelle strategie di disinvestimento: evidenze dal contesto europeo (The value creation in disinvestment strategies: evidences from the European context)

  • Enzo Peruffo
  • Alessandra Perri
  • Luca Pirolo
Keywords: divestiture, agency theory, refocusing, pre-divestiture performance


Purpose of the paper: In this work, we analyze the role of pre-divestiture performance on the divestiture’s value creation in the context of European countries. Specifically, we explore the existence of potential interaction effects between pre-divestiture performance and the presence of blockholder and the degree of relatedness between the divesting firm core business and the divested business unit.

Methodology: Econometric analysis on a unique dataset of 147 divestitures across thirteen countries is used to test the hypotheses.

Findings: The pre-divestiture performance of the parent firm moderates the impact of both the blockholder and the relatedness on the parent’s post divestiture performance. Our findings indicate that when prior performance is higher, the impact of the presence of a blockhdolder on parent performance is less positive, while the impact of unrelatedness between the divesting firm’s core business and the divested business unit is less negative.

Research limits: While our empirical analysis controls for the two most common modes of divestiture - spinoffs and sell-offs, we were not able to focus on homogeneous samples of divestiture deal types. Future work might more systematically test for differences across these modes, for instance through separate samples.

Practical Implication: From a managerial point of view, executives need to be aware that divestiture strategies do not only represent tools to remedy to wrong managerial decisions, but rather can also be used to pursue the firm’s growth. Moreover, they should consider that ownership structure and relatdness may affect the performance of the divestiture deal in ways that are dependent on the pre-divestiture performance. This may lead managers to modify the timing and overall design of their divestiture strategies.

Originality of the paper: Our study contributes to the divestiture literature by addressing the research gap on the determinants of the parent performance in European countries through a focus on pre-divestiture performance.


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