To Divest or not to Divest: A Meta-Analysis of the Antecedents of Corporate Divestitures

To Divest or not to Divest: A Meta-Analysis of the Antecedents of Corporate Divestitures

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Article ID: iaor2016445
Volume: 27
Issue: 1
Start Page Number: 179
End Page Number: 196
Publication Date: Jan 2016
Journal: British Journal of Management
Authors:
Keywords: investment, decision
Abstract:

Corporate divestitures have been identified as important strategic actions with a positive impact on firm performance. Yet, what is still missing in the strategic management literature is an integrative framework that quantitatively synthesizes the relative impact of various antecedents to divestitures, and theoretically reconciles the multitude of theories underlying divestiture research. To fill this gap, the author conducts a meta‐analysis (based on a sample of 35 studies) and develops four broad categories of determinants: corporate governance; firm strategy; performance; and industry environment. Evidence is found that divestitures are driven mainly by prior divestment experience, structural factors (firm size and firm diversification) and weak unit performance. In addition, the relative predictive validity of several theoretical perspectives on divestment decisions is assessed.

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