Have voluntary divestitures of US corporations increased shareholder wealth? Empirical evidence from the life cycle

Stock price performance resulting from voluntary divestiture has been shown to vary depending upon the motivation for divestiture. In a previous study it was shown that voluntary divestiture motivations depend on the life-cycle stage of the divestor. The present study shows that stock price performance surrounding a divestiture announcement depends on the life-cycle stage of the divesting firm, with firms in the later life-cycle stages generally performing more poorly than firms in earlier life-cycle stages. No group was shown, however, to generate significant positive cumulative average residuals over the observation period when compared to an appropriately matched control group.