Showing papers on "Divestment published in 1994"
TL;DR: In this article, inadequate governance and inappropriate strategy have been proposed as antecedents of the divestment activity of restructuring firms in the 1980s, and combined both views in a structural equati...
Abstract: Both inadequate governance and inappropriate strategy have been proposed as antecedents of the divestment activity of restructuring firms in the 1980s. We combined both views in a structural equati...
636 citations
TL;DR: The authors examined the role of accounting in ideological conflict by examining the ideological role accounting and social disclosure played in the South African divestment debates in the United States during the 1970s and 1980s.
Abstract: Social critiques of accounting have challenged the conventional view of corporate social disclosure as a neutral, technical tool for enhancing corporate social responsibility, and stressed the ideological role accounting plays in legitimating corporate activities. This paper extends the literature on the role of accounting in ideological conflict by examining the ideological role accounting and social disclosure played in the South African divestment debates in the United States during the 1970s and 1980s. The history of the Sullivan Principles and institutional divestment from South Africa provides an empirical context for examining both the potential and limits of accounting's capacity to serve the interests of subordinate groups and social movements.
147 citations
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TL;DR: In this paper, the authors find that asset sales lead to an improvement in the operating performance of the seller's remaining assets in each of the three years following the asset sale, and that the improvement in performance occurs primarily in firms that increase their focus.
Abstract: We find that asset sales lead to an improvement in the operating performance of the seller's remaining assets in each of the three years following the asset sale. The improvement in performance occurs primarily in firms that increase their focus; this change in operating performance is positively related to the seller's stock return at the divestiture announcement. The announcement stock returns are also greater for focus-increasing divestitures. Further, we find evidence that some of the seller's gains result from a better fit between the divested asset and the buyer.
74 citations
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TL;DR: The authors examined the relation between management turnover and divestitures of recently acquired divisions and found that at the time of a management change, there is an increased probability of divesting an acquisition at a loss or one considered unprofitable by the press.
Abstract: This paper examines the relation between management turnover and divestitures of recently acquired divisions. The empirical results indicate that at the time of a management change, there is an increased probability of divesting an acquisition at a loss or one considered unprofitable by the press. The probability increases by about the same amount regardless of whether the change is an apparent age-65 retirement or a resignation. Overall, the results are consistent with a variety of agency-based theories of corporate investment and suggest that management changes are important events for corporations because they lead to reversals of poor prior decisions.
39 citations
TL;DR: In this paper, a developing country's agenda for privatization includes restructuring, reform, commercialization, management cum-technology contracts for public enterprises and their leasing, prior to divestiture, joint venture, hire purchase and disinvestment of minority, majority or full shareholding through public offer or private sale.
Abstract: State intervention is needed to dismantle the protective regime of “government failure” and expose the developing economies to the new rigour of global competition and technological advancement. In addition to standing the test of welfare consequences, a developing country′s agenda for privatization includes restructuring, reform, commercialization, management‐cum‐technology contracts for public enterprises and their leasing – prior to divestiture, joint venture, hire purchase and disinvestment of minority, majority or full shareholding through public offer or private sale. The backward and forward linkages, the institutional framework, the pace and sequence, planning and preparation and financing of privatization, with transparency of procedure, are equally important preconditions for avoiding corruption and ensuring efficiency. Divestiture without reform can be counter‐productive. Divestiture without private sector development can remain “stillborn”.
29 citations
01 Jan 1994
TL;DR: The authors examined the potential link between the decline in competitiveness and acquisition and divestiture (refocusing) activity, and found that the trade-off between the acquired firms' shareholders often gain significant abnormal returns, while the acquired companies' shareholders, on average, receive zero or slightly positive returns.
Abstract: The decline in global competitiveness among US firms has been well documented (Franko 1989; Hill, Hitt and Hoskisson 1988; Young 1985). Accompanying this decline has been an increase in merger and acquisition activity that occurred in two surges — one in the late 1960s and one in the 1980s (Ravenscraft and Scherer 1987). Research has shown that acquisition strategies may involve trade-offs. For example, while acquired firms’ shareholders often gain significant abnormal returns, acquiring firms’ shareholders, on average, receive zero or slightly positive returns (Jensen 1988). The purpose of this paper is to examine the potential link between the decline in competitiveness and acquisition and divestiture (refocusing) activity.
23 citations
TL;DR: A novel system of performance contracts between the Bolivian Government and large, "strategic" state-owned enterprises was introduced in 1990 to help restructure them into more business-like, competitive and efficient firms.
20 citations
TL;DR: In this paper, the authors discuss the philosophy, process, organizational mechanism, expectations and outcomes of divestment in PEs and points out the major weaknesses retarding the success of the newly introduced divestment policy and outlines some reformatory measures to overcome them.
Abstract: Examines one of the most important reforms relating to public enterprise (PE) policy in India, namely divestment of their share‐holdings. Discusses the philosophy, process, organizational mechanism, expectations and outcomes of divestment in PEs. Finally, points out the major weaknesses retarding the success of the newly introduced divestment policy and outlines some reformatory measures to overcome them. As a backdrop, presents the historical background, current scenario, and problems and performance of PEs in India, but has been restricted to the central PEs, i.e. enterprises owned and managed by the central government only.
13 citations
TL;DR: In this paper, the authors compare the background and recent economic reforms in Hungary and Egypt in these terms and conclude that most of Egypt's privatization and much of Hungary's has come through the relaxation of government interference in the private sector.
Abstract: Divestiture of public sector assets is only one part of a broad definition of privatization. A more comprehensive evaluation should include economic liberalization policies, and the development of the legal and institutional infrastructure for the private sector as well. We compare the background and recent economic reforms in Hungary and Egypt in these terms. We show that most of Egypt's privatization and much of Hungary's has come through the relaxation of government interference in the private sector. We conclude that divestiture of public enterprises should not be the exclusive, or even main, concern of government policy or external advice.
11 citations
TL;DR: In this paper, it was shown that changes in the residual correlation between the firms' stock returns are helpful in explaining the reason for and the timing of the merger/divestiture.
Abstract: This paper shows that indirect evidence is often available to assist in understanding the timing of a vertical merger or divestiture. In particular, it is shown that in cases involving firm-specific capital, changes in the residual correlation (after removing market and industry effects) between the firms' stock returns are helpful in explaining the reason for and the timing of the merger/divestiture. The ramifications of this finding are immediate since anything that can pinpoint the reason for a merger, and, moreover, the reason for the timing of a merger, will make merger policy more efficient and productive. Copyright 1994 by Blackwell Publishing Ltd.
9 citations
01 Jan 1994
TL;DR: The United States Supreme Court has been severely criticized by tribal leaders and advocates as mentioned in this paper for its treatment of tribal powers of self-government, and has been charged with straying too far from John Marshall's "original proposition" that tribes are "distinct political communities, having territorial boundaries, within which their authority is exclusive, and having a right to all the lands within those boundaries, which is not only acknowledged, but guaranteed by the United States."
Abstract: The United States Supreme Court has been severely criticized by tribal leaders,' tribal advocates,2 and scholars3 for its treatment of tribal powers of self-government. The Court has been charged with straying too far from John Marshall's "original proposition" that tribes are "distinct political communities, having territorial boundaries, within which their authority is exclusive, and having a right to all the lands within those boundaries, which is not only acknowledged, but guaranteed by the United States."4 Put another way, the Court has substantially diluted the theory and substance of tribal sovereignty formulated in the early days of the republic.5 The modem Court readily admits that its conception of tribal sovereignty has not remained static over the years, but has evolved "in response to changed circumstances."6 These circumstances have included dramatic shifts in
TL;DR: Long-term trends in long-distance rates in the USA are examined through graphical representation as mentioned in this paper, showing that rates are ever decreasing and do not show any apparent long-term effects from either competition or the divestiture of the local Bell companies from AT&T.
22 Mar 1994
TL;DR: In Mexico, the privatization process has been characterized by the use of the stock market as a vehicle for the transfer of public-sector enterprises to the private sector as discussed by the authors, which has led to a significant increase in the number of privatized enterprises.
Abstract: An excerpt from Economic Transformation the Mexican Way MEXICO BEGAN TO DIVEST itself of public-sector enterprises in 1983. The Mexican authorities saw privatizing small public-sector entities as a way both to correct -- permanently -- public-sector finances and to improve productivity. This effort has continued with added intensity during President Salinas de Gortari's administration with the completion of larger and substantially more complex privatization operations. During the last nine years, the government has divested itself from practically all areas of economic activity: sugar mills, hotels, airlines, telecoms, banking, and steel. Of the 1,155 firms under state control in 1982, Mexico has privatized 905 with sales totalling US$14.5 billion, or around 5 percent of GDP. Another 87 are now under way. By the end of 1991, Mexico had transferred 250,000 employees to the private sector. Before I discuss the specific approaches we took to privatization in Mexico, let me say a brief word about the micro- and macroeconomic factors that shaped what we did. Microeconomic considerations Privatization does not focus just on the sale of a public entity. It also means looking at how the enterprise will be sold, how it will operate under private ownership, and which economic principles will govern both its sale and later operation. Questions will arise: Should an enterprise be sold through private placements or public auctions? What kind of sale will best achieve the government's objectives? Should the goal be liquidating, merging, or breaking up the enterprise? Should it be transforming it into a regulated monopoly? Should it be developing franchises to run separate pieces of the original business? There will also be questions about how competition and regulation will affect things after the sale. When planning a sale, for example, a government must consider the potential consequences and so design the sales scheme that the new private owners can manage the firm effectively -- and that, whenever possible, the firm will operate in a competitive environment. If this latter is not possible, the government should develop regulations to ensure efficient resource allocation. Shareholder control The privatization process, as well as the laws that accompany it, should make it possible for a strong, central board of directors actively to monitor the work of management. Dispersed shareholding can lead to less-than-optimal monitoring. Individually, small investors expend lots of energy monitoring performance, but have no leverage over management. Equally important, because multiple shareholders cannot easily share their knowledge, they usually end up duplicating one another's monitoring efforts. Next, as authorities encourage capital markets to develop, they must also introduce new regulations on takeovers and holding companies. Only if these are both in place will takeovers not introduce financial instability. Most practitioners accept that, within suitable guidelines, takeovers generate incentives for good managerial performance. Unfortunately, in developing economies, the culture and institutions necessary to provide such guidelines scarcely exist. So the authorities should use the privatization process to help local participants learn more about takeovers and corporate finance, as well as to develop a local capital market. Whenever possible, for example, they should use the local stock market to carry out privatization operations. Another key point: the mechanism of bankruptcy has to work properly. This may seem obvious to countries with extensive market experience. But it is not always obvious to others. Because, in times of crisis, the Mexican government often bailed out large private enterprises, the risk of going bankrupt had little effect on business managers' behavior. Privatization, then, should not simply re-establish the status quo by nationalizing inefficient private firms. …
01 Nov 1994
TL;DR: In the Latin American and Caribbean region, between 1985 and 1992, governments in the region privatized more than 2,000 publicly owned enterprises including banks, ports, airlines, highways, retail shops, public utilities, and insurance companies as mentioned in this paper.
Abstract: Between 1985 and 1992, governments in the Latin American and Caribbean region privatized more than 2,000 publicly owned enterprises including banks, ports, airlines, highways, retail shops, public utilities, and insurance companies. Chile and Mexico were among the first and most comprehensive. Their example was followed by Argentina, and soon most of the region had begun privatization programs. In nearly all countries, the primary motivation for this sell-off was the fiscal and debt crisis. With the revenues from the sale of state enterprises, governments were able to significantly reduce the hemorrhaging of public resources. In fact, what distinguishes this privatization effort from those in most other regions is its success in generating large revenues from public enterprise sales. More recently, however, divestiture policy has been based on objectives of efficiency, productivity, and new investment. Therefore, privatization was expected to result in lower prices, improved service delivery, and better product quality. Policymakers have also seen the rapid sale of state-owned enterprises (SOE) to a large and diverse group of new owners as a way of ensuring an irreversible reduction of the public sector.
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