The Efficiency of the Corporate Divestiture Deals in Developed and Emerging Markets

This work deals with the analysis of the efficiency of the corporate divestiture deals in developed and emerging markets in the short and long term period. This form of corporate restructuring is less common for emerging markets and now there is lack of literature about the divestitures’ efficiency on them. The theoretical part investigates and summarizes main motives for different types of divestitures and aggregates key findings in the efficiency estimation in the short term and long term perspective. The second part is dedicated to the analysis of methodology of the research. The empirical part of the paper considers a special form of divestitures - spin-offs. The sample consists of 116 deals in USA market and 87 deals in the emerging markets between 2004 and 2015. We find that companies experience positive market reaction on both markets, but in emerging markets the value of its effect is less. The study also finds that companies show improvement in operating performance three years after the deal.