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Working paper
Asset Liquidity and Segment Divestitures
7873
2000
Abstract
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.
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Details
- Title
- Asset Liquidity and Segment Divestitures
- Creators
- Ralph A WalklingFrederik P SchlingemannRene M Stulz
- Publication Details
- 7873
- Series
- NBER working paper series
- Publisher
- National Bureau of Economic Research; Cambridge, MA
- Resource Type
- Working paper
- Language
- English
- Academic Unit
- Finance
- Other Identifier
- 991021881389704721