Voluntary Corporate Divestitures and Value

Divestiture activity by U.S. corporations has increased sharply in recent years. In 1981, for example, the value of voluntary corporate divestitures (i.e., not a result of antitrust or similar action) in the U.S. exceeded $12 billion, a record and approximately twice the value of divestitures in 1980. There were over 500 divestitures in 1981, 45 of which exceeded $50 million in value. This study attempts to ascertain whether a voluntary divestiture has any real economic value to the divesting firm by examining varying factors related to the divestitures. Since the shareholders are the resid-