Asset Liquidity and Segment Divestitures / Frederik P. Schlingemann, Rene M. Stulz, Ralph A. Walkling.

Format:

Book

Author/Creator:

Schlingemann, Frederik P.

Contributor:

National Bureau of Economic Research.

Stulz, Rene M.

Walkling, Ralph A.

Series:

Working Paper Series (National Bureau of Economic Research) no. w7873.

NBER working paper series no. w7873

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2000.

Summary:

We investigate a sample of firms whose number of reported segments falls by one or more for the first time in their reporting history. The firms in our sample have a significantly larger diversification discount, underperform, and underinvest relative to comparable firms. Firms are more likely to divest segments from industries with a more liquid market for corporate assets, segments unrelated to the core activities of the firm, poorly performing segments, and small segments. The liquidity of the market for corporate assets plays an important role in explaining why some firms divest assets while others stop reporting them without divesting them, and why some firms divest core segments while others divest unrelated segments.

Notes:

Print version record

September 2000.