Showing papers on "Divestment published in 2012"
TL;DR: In this article, the role of technological innovation as an antecedent of changes in corporate scope is studied, and it is shown that successful innovation by a firm is followed by both expansion into new areas through complementary resource seeking acquisitions and divestment out of existing noncore businesses.
Abstract: This paper studies the role of technological innovation as an antecedent of changes in corporate scope. It argues that technological innovations prompt the firm to reconfigure its corporate portfolio—to redeploy resources to areas of new opportunity while it divests out of marginal businesses. Results from a cross-industry sample of U.S. manufacturing firms show successful innovation by a firm is followed by both expansion into new areas through complementary resource seeking acquisitions and divestment out of existing noncore businesses. This relationship is found to be moderated by the level of investible resources available to the firm, and supports the notion of scarce resources as a constraint on firm scope. In addition, firms are found to change their corporate scope in response to rival innovation. Copyright © 2011 John Wiley & Sons, Ltd.
137 citations
TL;DR: In this article, the authors look to a firm's social context, defined in terms of the per-share per-employee social context of a firm, to evaluate divestiture decisions.
Abstract: Because of the “opaque” nature of divestitures, investors face considerable uncertainty in evaluating divestiture decisions and thus may look to a firm's social context, defined in terms of the per...
102 citations
TL;DR: In this paper, the authors investigated the flexibility characteristics of an international production network to predict divestments of elements of this network and found that the decision to divest a foreign location due to rising and uncertain labor costs is moderated by the ease of dismissing workers and the opportunity to shift production to locations with opposite labor cost developments.
74 citations
TL;DR: In this article, the authors investigated the effects of cross-ownership on optimal privatization in mixed duopoly, and showed that cross ownership is profitable to the private firm only if the level of privatization of the public firm is sufficiently high.
Abstract: This paper investigates the effects of cross-ownership on optimal privatization, and vice-versa, in mixed duopoly. It shows that cross-ownership is profitable to the private firm only if the level of privatization of the public firm is sufficiently high. In equilibrium, cross-ownership does not take place even if there is partial privatization. However, the possibility of cross-ownership significantly limits the socially optimal level of privatization in most of the situations. Moreover, it demonstrates that full nationalization is socially optimal, in case of sufficiently convex identical cost functions and homogeneous goods. These results have strong implications to both divestment and competition policies.
39 citations
Posted Content•
TL;DR: In this paper, the authors present the highlights of more than 700 articles of e-competitions that address specifically, or more generally, merger remedies undertaken and accepted, or imposed, by competition authorities.
Abstract: Remedies are an important tool for competition authorities in merger control. In most jurisdictions, prohibitions can be avoided by crafting remedies able to resolve competition law concerns. The design and implementation of merger remedies have evolved during the last two decades. Merger remedies aim to remove competition law concerns raised by a merger. They are designed on a case by case basis. The objective of this foreword is to present the highlights of more than 700 articles of e-Competitions that address specifically, or more generally, merger remedies undertaken and accepted, or imposed, by competition authorities. The review of merger remedies reported in e-Competitions confirms the trend towards a clear preference for structural remedies in the form of divestitures. The large majority of national competition authorities use divestitures to resolve competition law concerns. Such preference for divestment remedies is consistent with EU practice. National competition authorities are more open to behavioral remedies than the European Commission. A possible explanation may be the difficulty to find a suitable buyer at the national level, which reduces the effectiveness of divestment remedies. In our view the use of behavioural remedies may reveal two other weakness of merger control enforcement at national level: the risk of over and under-enforcement. Indeed, the adoption of behavioural remedies may be unnecessary in some cases, or insufficient to resolve competition concerns in other scenarios. Over-intervention raises the question of inefficiencies that may result: behavioural remedies may chill competition instead of safeguarding it. This is particularly the case of remedies related to output restrictions. On the other hand, under-intervention bears the risk of allowing market concentration that would favor either tacit collusion, or the use of increased market power to distort competition.
26 citations
Book•
09 Feb 2012
TL;DR: The IOM Forum on Global Violence Prevention held a workshop to examine the successes and challenges of calculating direct and indirect costs of violence, as well as the potential cost-effectiveness of intervention.
Abstract: Measuring the social and economic costs of violence can be difficult, and most estimates only consider direct economic effects, such as productivity loss or the use of health care services. Communities and societies feel the effects of violence through loss of social cohesion, financial divestment, and the increased burden on the healthcare and justice systems. Initial estimates show that early violence prevention intervention has economic benefits. The IOM Forum on Global Violence Prevention held a workshop to examine the successes and challenges of calculating direct and indirect costs of violence, as well as the potential cost-effectiveness of intervention.
25 citations
TL;DR: Li et al. as mentioned in this paper found that despite high aggregate investment and remarkable economic growth, negative investment is commonly found at the microeconomic level, and that private firms divest in order to raise capital, while state-owned firms restructure by getting rid of obsolete capital in the face of increasing competition and hardening budget constraints.
Abstract: This paper addresses a puzzle in China’s investment pattern: despite high aggregate investment and remarkable economic growth, negative investment is commonly found at the microeconomic level. Using a large firm-level dataset, we show that private firms divest in order to raise capital. We also find that, owing to over-investment and mis-investment in the past, state-owned firms have had to restructure by getting rid of obsolete capital in the face of increasing competition and hardening budget constraints. Finally, rapid economic growth counterweighs both effects for all types of firms, with a larger impact in the private and foreign sectors.
21 citations
TL;DR: In this article, the authors assess the potential of using scientometric and patentometric indicators as a way of instrumentalizing the selection process of projects for seed capital funding and assess the extent to which these indicators may contribute to understanding the market potential of the technology once it is assessed.
Abstract: The aim of this article is to assess the potential of using scientometric and patentometric indicators as a way of instrumentalizing the selection process of projects for seed capital funding. There is an increasing interest in technology based enterprises for their capacity to contribute to economic and social development, but there is also some difficulty in assessing non-financial criteria associated with technology for the purposes of financial funding. Thus, this research selected the case of the first enterprise invested in by the largest seed capital fund in Brazil, in order to create scientific and technological indicators and to assess the extent to which these indicators may contribute to understanding the market potential of the technology once it is assessed. It was concluded that scientometric and patentometric indicators favour the assessment process for non-financial criteria, in particular those criteria dealt with in this study: technology, market, divestment, and team.
20 citations
09 Feb 2012
TL;DR: In this article, the authors examined the issues of modeling and forecasting the volatility of ship prices, while others have focused on the importance of ship price volatility in the decision making of market participants, as well as in the pricing of assets and derivatives.
Abstract: Volatility in ship prices has always been an issue of concern for banks, shipyards and shipping companies, because fl uctuations in ship prices over short periods of time have signifi cant impact on the profi tability and viability of shipping ventures. Volatility of ship prices is an important factor for shipowners, not only because it affects the balance sheet value of their company, but also because a reduction in the value of a ship may affect the creditworthiness of shipowners and their ability to service their debt obligations, since ships are used as collateral in ship fi nance transactions. For this reason, banks fi nancing ships, investors providing equity to shipowners and operators, shipyards building new ships and asset players in shipping markets all tend to monitor the volatility of the market for ships and to incorporate such information in their lending, investment, portfolio construction and divestment decisions. From the practical point of view, investors and fi nanciers pay particular attention to the volatility of ship prices in order to design and set terms of credit for ship fi nance, and asset players monitor changes in ship price for investment timing and portfolio management, while shipyards follow conditions in the market for ships in order to judge whether to expand or contract production, or to offer deals in order to attract new clients and secure contracts. From the academic point of view, several studies have examined the issues of modeling and forecasting the volatility of ship prices, while others have focused on the importance of ship price volatility in the decision making of market participants, as well as in the pricing of assets and derivatives. For instance, Kavussanos (1997) investigates the dynamics of volatility in the price of second hand dry bulk carriers and argues that there is a positive relationship between price volatility and vessel size. Alizadeh and Nomikos (2003) examine the relationship between ship price volatility and trading activities in the sale and purchase market for dry bulk carriers, and fi nd that volatility of ship prices is inversely related to trading volume Ship Finance: Hedging Ship Price Risk Using Freight Derivatives
19 citations
TL;DR: The authors explored the discourses surrounding the Boycott, Divestment, and Sanctions (BDS) movement aimed at ending the Israeli occupation of the West Bank and Gaza Strip.
Abstract: This article explores the discourses surrounding the boycott, divestment, and sanctions (BDS) movement aimed at ending the Israeli occupation of the West Bank and Gaza Strip. Although the boycott strategy is a form of unarmed resistance and thus nonviolent in scope, it has not been widely framed as a ‘‘nonviolent’’ movement. Furthermore, the boycott movement has often been framed in negative terms in Western media, and Israeli representatives have gone so far as to call the BDS movement anti-Semitic, claiming it seeks to delegitimize the State of Israel. This article parses out how activists and opponents frame the movement and the extent to which these framings reflect actual practice and goals of the movement, through focusing on the case of the University of California, Berkeley student government’s effort to pass a divestment bill in spring 2010. The authors argue that supporters and opponents use different approaches to peace and conflict, which influences how they view the BDS movement.
18 citations
18 Sep 2012
TL;DR: In this article, the authors present a causality chain: the two Great Reversals led to higher equity payout ratios and lower retention ratios in companies that in turn caused lower rates of capital accumulation, which in turn led to lower growth rates.
Abstract: The advent of shareholder value (‘Great Reversal in Corporate Governance’)
coupled with shareholdership’s increasing short-termism (‘Great Reversal in
Shareholdership’) have contributed to the low growth rates in France, Germany,
The Netherlands, UK, US. The study presents a causality chain: the two Great
Reversals led to higher equity payout ratios and lower retention ratios in
corporations that in turn caused lower rates of capital accumulation that in
turn caused lower growth rates. Corporate law is an accomplice for the
advent of shareholder value and thus shares the blame for the low rates of
capital accumulation. The post-Bretton Woods shareholder value index -a
numerical legal index- shows the progress that the corporate law has made at the
shareholder value level during the past 40 years.Corporate law has escalated
the divestment of long-termist investors from equity and has preserved the trend
towards short-termism. Corporate law developments generating bias in favor of
short-termism are presented.‘Long Governance’ emerges as a remedy for
stagnation. It is a management theory calling management to observe the long-run
interests of all the shareholders who hold, have held, or will hold stock and a
legal concept requiring directors’ duties to be discharged towards maximizing
long-term corporate welfare.
TL;DR: In the wake of historical and political events, stakeholder pressure can trigger shareholders to divest from socially irresponsible markets following the goal of accomplishing socio-political change as mentioned in this paper, which is referred to as political divestiture.
Abstract: In the wake of historical and political events, stakeholder pressure can trigger shareholders to divest from politically incorrect markets. Political divestiture is the investment withdrawal from socially irresponsible markets following the goal of accomplishing socio-political change. One of the most prominent political divestiture cases is the foreign capital flight from South Africa during Apartheid. In the emerging literature on Socially Responsible Investment (SRI), scarce are comparative studies of the impact of political divestiture on corporate market values. Six studies of political divestiture from Apartheid South Africa were meta-synthesized to find a pattern of stakeholder pressure, political divestiture and corporate endeavors. The results varied – some studies suggest a positive, others a negative impact and even no relation of political divestiture and corporate value was reported. The instringent findings are attributed to stem from methodological specificities of event studies. The internal validity of event study designs is limited by confounding and contaminating occurrences and sample selection biases. Insider trading information leakage and industry-specificities imply additional drawbacks. The external validity is challenged by geographically-limited and time-targeted foci as well as non-typical samples that lower the results’ replicability and generalizability. Future research may compare divesting corporations’ performance with those operating in politically incorrect markets. Concurrently improving the event study measurement will help advancing the idea of financial social responsibility as a means of global governance.
Journal Article•
TL;DR: In the Southern Ocean, two types of environmental campaigns have targeted the whaling industry: consumer boycotts and protests to encourage divestment from the industry and interventionist activism to directly intervene in and obstruct whaling operations as mentioned in this paper.
Abstract: In the Southern Ocean, two types of environmental campaigns have targeted the whaling industry. One approach, which exemplifies what I define as “protest” activism, utilizes consumer boycotts and protests to encourage divestment from the industry. The other approach, which exemplifies what I define as “interventionist” activism, uses a fleet of ships to directly intervene in and obstruct whaling operations in the Southern Ocean. Through the case study method, I demonstrate that the lawmaking function of activism and the effect it has on international behavioral norms change depending on the model employed. I conclude that, despite serious drawbacks, there are certain circumstances under which interventionist activism should be used to enforce international environmental law.
TL;DR: In this article, the influence of socially responsible investment (SRI) on the social and environmental impact of the market and corporate behavior is investigated. And the authors assess SRI's influence through five means: (i) to promote SRI as a profitable alternative to conventional investment; (ii) to alter the cost of capital of targeted companies, such as by divestment; (iii) to advocate change within companies as shareholders or lenders; (iv) to draft codes of conduct for systemic changes across domestic or global financial markets; and (v) to lobby for reform of
Abstract: This article investigates the influence of socially responsible investment (SRI) on the social and environmental impact of the market and corporate behavior. It assesses SRI's influence through five means: (i) to promote SRI as a profitable alternative to conventional investment (ii) to alter the cost of capital of targeted companies, such as by divestment, and thereby to create pressure for improved corporate behavior; (iii) to advocate change within companies as shareholders or lenders, such as by filing shareholder resolutions and informal engagement with corporate management; (iv) to draft codes of conduct for systemic changes across domestic or global financial markets; and (v) to lobby for reform of public policy and official regulation pertaining to the financial economy. The article finds that in all of these means SRI has so far failed to wield exert significant influence, but its most promising means of influence is through advocating legal and policy changes.
TL;DR: In this paper, the authors analyzed the information problem between the seller and the buyer of a business unit in a sell-off and theoretically conceptualized and operationalized critical success factors to overcome this information problem, and examined their performance impact on divestment success.
TL;DR: The authors empirically examined whether less efficient plants reduce capacity, and analyzes the presence and extent of production misallocation resulting from capacity divestment in the Japanese cement industry, finding that less efficient firms are not more likely to reduce capacity than more efficient firms.
Abstract: As demand in an industry shrinks, pressure for the reduction of capacity arises. Against this background, a key issue is whether plants which, from an efficiency perspective, should reduce output or close down in fact do so. Focusing on the Japanese cement industry, this paper empirically examines whether less efficient plants reduce capacity, and analyzes the presence and extent of production misallocation resulting from capacity divestment. We find that less efficient firms are not more likely to reduce capacity than more efficient firms; however, less efficient plants within a multi-plant firm are more likely to reduce capacity than more efficient plants. In addition, conducting an experimental exercise, we find that this divestment pattern has lead to a substantial drop in industry-wide allocative efficiency. The experimental exercise further reveals that it is the misallocation of production across firms that accounts for the largest part of the drop in allocative efficiency. This result suggests that the presence of multi-plant firms can help to alleviate inefficiencies arising in a period of industry decline.
01 Jan 2012
TL;DR: The authors examine the impact of familiarity with business segments on CEOs' divestment decisions and find that CEOs are less likely to divest assets from familiar than from non-familiar segments, attributing this effect to comparative information advantage relative to familiar segments.
Abstract: markdown____
We examine the impact of familiarity with business segments on CEOs’ divestment decisions. We find
CEOs to be less likely to divest assets from familiar than from non-familiar segments. We attribute this
effect to CEOs’ comparative information advantage relative to familiar segments. Reflecting this
information advantage, we document the familiarity effect to be particularly strong in R&D intensive
industries. We further find the familiarity effect to be most pronounced for longer-tenured CEOs who
have built up sufficient political power over the course of several years in office to enable implementation
of their preferred choices. We also document the value effects of divestments and show familiarity to
affect returns on divestment announcements.
[version: August 2013]
TL;DR: In this article, the authors analyse the relationship between standard real option prices and the more general risk-averse real option values, and illustrate how these general values depend on the frequency of decision opportunities, the investor's risk tolerance and its sensitivity to wealth, his expected return and volatility of the underlying asset, and the price of the asset relative to initial wealth.
Abstract: We model investment opportunities with a single source of uncertainty, i.e. the market price of the investment. Investment cost can be predetermined or perfectly correlated with the market price. The common paradigm for risk-neutral real-option pricing is a special case encompassed within our general framework, and we analyse the relationship between standard real option prices and the more general risk-averse real option values. Numerical examples illustrate how these general values depend on the frequency of decision opportunities, the investor’s risk tolerance and its sensitivity to wealth, his expected return and volatility of the underlying asset, and the price of the asset relative to initial wealth. Specific applications to real estate include property investment under ‘boom-bust’ or mean-reverting price scenarios, and buy-to-let or land-development opportunities.
TL;DR: This paper analyzed the state of environmental, social and governance (ESG) investing by college endowments, by aggregating multiple datasets addressing three areas of activity: incorporation of ESG criteria into endowment management, shareholder advocacy and active-ownership initiatives, and governance and transparency of the ESG activities.
Abstract: This paper, commissioned and sponsored by the IRRC Institute, analyzes the state of environmental, social and governance (ESG) investing by college endowments, by aggregating multiple datasets addressing three areas of activity: 1) incorporation of ESG criteria into endowment management, 2) shareholder advocacy and active-ownership initiatives, and 3) governance and transparency of ESG activities. Among endowments, we find a weak understanding of ESG investing concepts and practices, due to low participation in investor networks where leading discussions of sustainable, responsible and impact investing occur. We also highlight wide variance within existing data, a general lack of transparency, and numerous problems raised by our independent verification of self-reported data. It appears that far less ESG investing activity is occurring among endowments, despite widespread association of colleges with recent campaigns such as Sudan divestment. In order to understand what activity we do find, we argue that ESG investing by endowments should be understood within the specific context of stakeholder dynamics, which distinguish endowments from foundations and other institutional investors.
Posted Content•
TL;DR: In this article, the authors examined how divestiture affects the performance of listed companies in Taiwan and found significant positive stock abnormal returns associated with divestiture announcements for listed companies and furthermore, firms generally experienced enhanced performance after undertaking divestiture activities.
Abstract: This study examines how divestiture affects the performance of listed companies in Taiwan. Divestiture describes firms selling their assets, production lines, subsidiaries or other segments for either cash or securities. This study focuses on two types of divestiture activities: sell-offs and equity carve-outs. Specifically, this work employs a control group design to examine 266 sell-off and equity carve-out announcements between 1995 and 2004, and measures the short-term abnormal stock returns and long-term (5 years) operating performance using financial ratios. The analytical results show significant positive stock abnormal returns associated with divestiture announcements for listed companies in Taiwan. Furthermore, firms generally experienced enhanced performance after undertaking divestiture activities.
Journal Article•
TL;DR: In this paper, the authors discuss the factors causing such irrational behavior and also build a conceptual model identifying the causal factors for investment behavior of people and the mode in which investment behavior is affected by such factors.
Abstract: Conventional theories of finance are built on the assumption that people behave rationally and predictably while taking investment and divestment decisions so as to maximize their wealth. In practice, it is observed that people often exhibit quasi-rational or in some cases irrational financial behavior while taking investment and divestment decisions. Such behavior, triggered by emotional and cognitive biases of people, are inconsistent with and contradictory to the conventional theories of finance. Such illogical and quasi-rational/irrational financial behavior of investors has been termed as Behavioral Finance. Behavioral Finance is a potential factor behind market inefficiencies. This paper aims at discussing three relevant aspects of behavioral finance. Firstly the paper discusses the factors causing such irrational behavior and also to build a conceptual model identifying the causal factors for investment behavior of people and the mode in which investment behavior is affected by such factors. The second objective of this paper is to suggest measures to counter such factors and enable the investors to take more rational decisions thereby reducing the chance of market inefficiencies. Thirdly the paper aims at identifying the possible area for further research on behavioral finance.
Journal Article•
TL;DR: In this paper, the influence of socially responsible investment (SRI) on the social and environmental impact of the market and corporate behavior is investigated. And the authors assess SRI's influence through five means: (i) to promote SRI as a profitable alternative to conventional investment; (ii) to alter the cost of capital of targeted companies, such as by divestment; (iii) to advocate change within companies as shareholders or lenders; (iv) to draft codes of conduct for systemic changes across domestic or global financial markets; and (v) to lobby for reform of
Abstract: This article investigates the influence of socially responsible investment (SRI) on the social and environmental impact of the market and corporate behavior. It assesses SRI's influence through five means: (i) to promote SRI as a profitable alternative to conventional investment (ii) to alter the cost of capital of targeted companies, such as by divestment, and thereby to create pressure for improved corporate behavior; (iii) to advocate change within companies as shareholders or lenders, such as by filing shareholder resolutions and informal engagement with corporate management; (iv) to draft codes of conduct for systemic changes across domestic or global financial markets; and (v) to lobby for reform of public policy and official regulation pertaining to the financial economy. The article finds that in all of these means SRI has so far failed to wield exert significant influence, but its most promising means of influence is through advocating legal and policy changes.
TL;DR: In this article, the authors argue that the investment malaise can be attributed to distortions introduced by the New Economic Policy (NEP) and its reincarnates, and the widespread presence and overbearing influence of government-linked corporations (GLCs) that deter new investment.
Abstract: Private investment in Malaysia has never fully recovered from the impact of the Asian financial crisis (AFC). Both domestic and foreign investment have remained lackluster post-AFC; while foreigners continue to shun Malaysia, it seems even domestic investors are fleeing as well, with Malaysia having become a net exporter of capital since 2005. The crucial questions are: what happened and can it be fixed? We argue that the investment malaise can be attributed to two interrelated factors: (i) distortions introduced by the New Economic Policy (NEP) and its reincarnates, and (ii) the widespread presence and overbearing influence of government-linked corporations (GLCs) that deter new investment. While the impacts of both factors may have been masked during the heady days leading up to the AFC, this is no longer the case in the current competitive environment where residency options for both capital and skilled labor are much greater. Fixing the problem requires addressing the distortions of the NEP and curtailing the influence of the GLCs. Although there have been a few recent moves to dilute the NEP, some of these measures have already been reversed. Similarly, while there has been an active program of divestment from GLCs, there have also been GLC acquisitions in new sectors, making it more of a diversification than a divestment program. Malaysia’s investment malaise can be fixed, but not in this way.
Journal Article•
TL;DR: In this article, the authors present a case study of a carve-out project to divest a business unit within a global multi-business company, which sheds light on how CIOs can create divestiture-ready IT environments and thus better prepare their organizations for IT carveout projects.
Abstract: The divestiture of a business unit-also known as a "carve-out"-is a common strategy used by multi-business organizations to adjust their business portfolios in response to a change in business strategy, and legal or regulatory pressures. In a typical divestiture, systems that were integrated in the past to deliver seamless and efficient IT operations must be pulled apart under demanding time and regulatory compliance constraints. Yet, as with many merger and acquisition projects, CIOs involved in carve-out projects that include critical dependencies on IT systems may be excluded from the due-diligence process. This article presents a case study of a carve-out project to divest a business unit within a global multi-business company. In addition to the lessons learned about unique aspects of managing IT for a business unit divestiture, this case sheds light on how CIOs can create divestiture-ready IT environments and thus better prepare their organizations for IT carve-out projects.
TL;DR: In this article, the impact of key influencing factors on four different recovery strategies such as management changes, financial restructuring, internal and external strategies was assessed, and the results showed that top management would select financial restructuring if inadequate financial control and policy caused acute crisis in a mature company, which had medium competitive position in mature industry.
Abstract: The main purpose of this study was to assess the impact of key influencing factors on four different recovery strategies such as management changes, financial restructuring, internal and external strategies. The research sample comprised 48 mature companies in Serbia. The Empirical results show that top management would select financial restructuring if inadequate financial control and policy caused acute crisis in mature company, which had medium competitive position in mature industry. The managers in all observed companies implemented internal strategies, especially divestment, regardless the key influencing factors. If competitive weakness caused crisis in a company with medium competitive position, top management would select external strategies.
Key words: Strategy, crisis, recovery, management, Serbia.
Posted Content•
TL;DR: In this article, the authors examined how divesture affects the performance of listed companies in Taiwan and found significant positive cumulative abnormal returns associated with firm divesting announcements and that divestiture activities can improve their operating performance and enhance firm value.
Abstract: This study examines how divesture affects the performance of listed companies in Taiwan. Divestiture describes firms selling their assets, production lines, subsidiaries or other segments for either cash or securities. This study focuses on two types of divestiture activities: sell-offs and equity carve-outs. Specifically, this work employs a control group design to examine 266 sell-off and equity carve-out announcements between 1995 and 2004, and measures the short-term abnormal stock returns and long-term (5 years) operating performance using financial ratios. The analytical results show significant positive stock abnormal returns associated with divestiture announcements for listed companies in Taiwan. Furthermore, firms generally experienced enhanced performance after undertaking divestiture activities.JEL: G34, G14KEYWORDS: Divestiture, Sell-offs, Equity carve-outs, Event study, Taiwan(ProQuest: ... denotes formulae omitted.)INTRODUCTIONFirms can adopt numerous growth strategies, one of which is divestiture. One recent trend has seen diversified firms exhibit a diversification discount compared to stand-alone firms. Rajan, Servaes and Zingales (2000) think that with increased diversity in resources and opportunities, resources flow towards the least efficient division, resulting in less efficient investment and lower firm value. Studies show that firms that engage in divestitures and increase their focus achieve improved operating performance and stock returns (Comment & Jarrell, 1995; John & Ofek, 1995). Dittmar and Shivdasani (2003) indicate that the efficiency of segment investment increases considerably following divestitures.Other empirical studies on divestitures focus on two areas, namely the impacts of divestiture activities on stockholder wealth and firm operating performance, respectively. Numerous studies have investigated the effect on shareholder wealth of firm announcements to voluntarily divest part of their operations, and all have shown that divestiture announcements positively affect parent firm stock returns ( Mulherin & Boone, 2000; Dittmar & Shivdasani, 2003; Datta, Iskandar-Datta, & Raman, 2003; Veld & Veld-Merkoulova, 2004). Regarding the impact of divestiture activities on the operating performance, Haynes, Thompson and Wright (2002) indicate that divestment significantly, positively and substantially enhances firm profitability. Hanson and Song (2003) found that divestitures improve firm operating performance, apparently by removing negative synergies. Most scholars support the perspective that divestitures improve operating performance (Hulburt, Miles & Woolridge, 2002; Dittmar & Shivdasani, 2003).Few empirical studies have examined firm divestitures in Taiwan or other emerging developing economies. Therefore, it is worth exploring whether or not Taiwanese firms engaging in divestitures improve their performance. Regarding shareholder wealth effects, most previous studies focused on the wealth effect of merger/investment announcements and payment for acquisitions. Previous studies of the wealth effect associated with firm divestiture announcements have been insufficient. This study explores whether firm divestitures significantly affect stock returns.This study examines a sample of 266 sell-offs and equity carve-outs between 1995 and 2004 and measures short-term performance based on stock returns and long-term (5 years) operating performance based on financial ratios. The evidence reveals significant positive cumulative abnormal returns associated with firm divesting announcements and that divestiture activities can improve their operating performance and enhance firm value. The rest part of this paper is organized as follows. Section 2 reviews the related studies. Section 3 depicts the sample. Section 4 reports the empirical results. Section 5 concludes.LITERATURE REVIEWJohn and Ofek (1995) documented a significant improvement in the performance of the seller firm's remaining assets in the two years following the divestment. …
07 Sep 2012
TL;DR: The progress that New Chrysler has made since it was created from the sale of the Old Chrysler assets in July 2009 and the path of the divestment of the federal government's stake in Chrysler is described in this article.
Abstract: This report describes the progress that New Chrysler has made since it was created from the sale of the Old Chrysler assets in July 2009 and the path of the divestment of the federal government's stake in Chrysler.
Journal Article•
TL;DR: The Hart-Scott-Rodino Antitrust Improvements Act (HSR) as mentioned in this paper has been used extensively in the context of merger enforcement, where firms planning mergers of a certain value are required to notify the antitrust agencies in order to make the agencies aware of combinations that may cause competitive issues.
Abstract: TABLE OF CONTENTS INTRODUCTION I. DIVESTITURE AS A PREFERABLE ANTITRUST REMEDY A. Background B. Allocation of Investigations Between the FTC and DOJ 1. The Hart-Scott-Rodino Antitrust Improvements Act 2. Attempted Reforms to the Clearance Process II. THE SUCCESS OF THE FTC's DIVESTITURE POLICY A. The 1999 FTC Divestiture Study B. Agency Involvement Has Led to Divestiture Success C. Past "Unsuccessful" FTC Divestitures III. CONVERGENCE OF THE FTC's AND DOJ's DIVESTITURE POLICIES A. Common Ground Between the Agencies B. Structural Differences Between the Agencies C. Areas in Which the Agencies' Policies Diverge 1. Fix-It-First Remedies 2. Up-Front Buyers 3. Crown Jewel Provisions D. Antitrust Community Concerns About the Differences Between the Agencies" Divestiture Policies IV. THE FTC's POLICY IS STRONGER AND THUS SHOULD BE ADOPTED BY THE DOJ A. Consistency Between the Agencies Is Essential B. The FTC's Policy of Active Involvement in Divestitures Lowers Risk to Consumers CONCLUSION INTRODUCTION Since the passage of the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) in 1976, (1) firms planning mergers of a certain value are required to notify the antitrust agencies in order to make the agencies aware of combinations that may cause competitive issues. Either the Federal Trade Commission (FTC) or Department of Justice Antitrust Division (DOJ) (collectively, "the agencies") will analyze the proposed merger, and if the agency has reason to believe the merger will be anticompetitive, (2) it may consider modifications to the deal that would eliminate competitive concerns or seek an injunction to keep the parties from consummating their merger. (3) The agencies and parties typically seek to modify the deal to preserve or restore the competitive landscape that existed before the merger (4) by creating a viable competitor to replace the acquired or merged firm. (5) If the agencies and parties agree on an acceptable modification, they may enter into a binding final judgment, or consent decree, that memorializes their agreement. (6) Courts have the power under the Tunney Act to determine whether a final judgment that the DOJ proposes is "in the public interest." (7) Because courts do not have the power to conduct their own analyses beyond whether a proposed divestiture will be in the public interest, it is the realm of the antitrust agencies to build divestiture packages that will not only be in the public interest, but that will also adequately remedy competitive problems caused by a merger. (8) When the FTC and DOJ allow a merger to go through with a divestiture, they aim to use the divestiture to recreate the pre-merger competitive landscape. (9) In creating a divestiture package, the policy of both agencies has been to find an acceptable buyer who is financially viable and can use the divested assets to replace the amount of competition lost in the merger. (10) However, "It]he view persists that the two antitrust agencies approach the issue of merger remedies differently." (11) Although the agencies tend to downplay the differences in their policies and preferences regarding the level of agency involvement in building a divestiture package, they behave differently in several notable respects. The agencies have different policies on: implementing "fix-it-first" remedies, which allow the parties to restructure their deal before consummating the merger without entering into a consent order; (12) requiring the divesting party to find an "upfront" buyer before agreeing to a consent order; (13) and using "crown jewel provisions," by which the agency requires the merging firms to agree to divest a particular high value asset that in and of itself may not be necessary to restore competition but is more likely to attract desirable buyers. …
Dissertation•
01 Jan 2012
TL;DR: In this paper, the role of the individual is de-centered, with focus shifting to competencies, meanings, materials and rules, and the negotiation of value is found to be central to all practices of divestment, albeit varying in different contexts and spaces.
Abstract: This thesis concerns the practices of material divestment for household durable objects; with the aim that understanding these practices will assist in making them more sustainable in the future. The role of consumption, waste, and material divestment is discussed in the context of global disparities in resource use and living standards. Informed by a theoretical framework based on social practices, the role of the individual is de-centered, with focus shifting to competencies, meanings, materials and rules. These elements of practice are also subject to variation in scale, intensity, trajectory and form. Understanding everyday practice in this way allows the research to conceptualize dynamics of change as re-configurations of the elements of practice.
Empirical investigation is conducted through semi-structured interviews, participant observation, and media and document analysis. Households and providers of divestment related services in Australia and the Netherlands are consulted to develop a grounded theory account of the systems of material divestment. This approach yielded four different systems of practice: retainment, altruistic divestment, return-oriented divestment and ridding.
The negotiation of value is found to be central to all practices of divestment, albeit varying in different contexts and spaces. Practices of storing, making-do, treasuring, donation, passing-on, online and auction selling, garage sales, decluttering, leaving-out, and disposing are described as distinct, yet interrelated avenues for divesting durable household objects.
The potential for divestment practices to be made more sustainable is discussed by way of initiatives that would promote a re-engagement with waste materials through increased visibility and reduced distancing with practitioners. The alignment of practices is also advocated as a means to promote material and object re-use, thereby reducing overall waste generated. As trends toward economies of access emerge, collaborative forms of material use and appear to offer new ways of promoting sustainable consumption. Further research avenues are explored, with a renewed and revised concept of waste, and its implications for public policy.
TL;DR: In this article, the authors examined the impact of the federal divestiture of many federally funded transportation services to remote sites and demonstrated that the outcome of the process has varied based on the ability of each remote site to attract investment from other levels of government and/or the private sector.
Abstract: The governance framework of the national transportation system in Canada shifted dramatically in recent years with divestiture of many federally funded transportation services to stakeholders such as the provinces and territories, local governments, not-for-profit corporations and the private sector. Although the academic literature declared divestiture a success with the creation of port and airport authorities for urban centers, it largely overlooked the management consequences for remote ports and airports of the transition from dependence on federal subsidies to owning, operating and funding remote transportation infrastructures. This paper examines the divestiture impact on remote sites and demonstrates that the outcome of the federal devolution process has varied based on the ability of each remote site to attract investment from other levels of government and/or the private sector. An introductory case study of remote ports and airports in the provinces of Newfoundland and Labrador, Nova Scotia and New Brunswick is presented. The research assesses issues relating to the divestiture process, post-devolution structure, individual site performance, and locally desired changes to the present system. The paper concludes that governance frameworks for remote regions will continue to evolve into a myriad of approaches based on each community's political, economic and social circumstances.