Value Creation from Divestitures  615
Value Creation from Divestitures
Academic research provides abundant evidence of divestitures’ potential to 
create value.1 A 2012 survey of the empirical results of more than 10,000 pri-
vate and public transactions found significant positive excess returns associ-
ated with the announcement of different types of divestitures.2 Exhibit 32.2 
summarizes the results. Actual excess returns are probably higher because 
many companies disclose their intentions to divest well before the transaction 
is announced.3
1 See, for example, J. Mulherin and A. Boone, “Comparing Acquisitions and Divestitures,” Journal of 
Corporate Finance 6 (2000): 117–139; J. Miles and J. Rosenfeld, “The Effect of Voluntary Spin-Off An-
nouncements on Shareholder Wealth,” Journal of Finance 38 (1983): 1597–1606; K. Schipper and A. 
Smith, “A Comparison of Equity Carve-Outs and Seasoned Equity Offerings: Share Price Effects and 
Corporate Restructuring,” Journal of Financial Economics 15 (1986): 153–186; K. Schipper and A. Smith, 
“Effects of Recontracting on Shareholder Wealth: The Case of Voluntary Spin-Offs,” Journal of Financial 
Economics 12 (1983): 437–468; J. Allen and J. McConnell, “Equity Carve-Outs and Managerial Discre-
tion,” Journal of Finance 53 (1998): 163–186; and R. Michaely and W. Shaw, “The Choice of Going Public: 
Spin-Offs vs. Carve-Outs,” Financial Management 24 (1995): 5–21.
2 B. Eckbo and K. Thornburn, “Corporate Restructuring,” Foundations and Trends in Finance 7 (2012): 
159–288.
Exhibit 32.2  Market-Adjusted Announcement Returns of Divestitures
Lowest CAR
Sample-size-
weighted CAR
Highest CAR
Cumulative abnormal returns (CAR),1 %
Number of 
empirical 
studies
Number of 
transactions2
Time frame3
Spin-offs
24
2,957
1962–2007
Carve-outs
10
1,251
1965–2007
Asset sales
25
7,544
1963–2005
1 CAR measured from 1 day before to 1 day after announcement and shown as highest, lowest, and sample-size-weighted value across the individual empirical 
studies.
2 Sum of the sample sizes of all individual empirical studies.
3 Years for which at least 1 of the empirical studies included a transaction.
Source: B. Eckbo and K. Thornburn, “Corporate Restructuring,” Foundations and Trends in Finance 7 (2012): 159–288.
1.7
0.5
0.3
3.3
1.8
1.2
5.6
2.7
3.4
3 See P. Ghazizadeh, A. de Jong, and F. Schlingemann, “Voluntary Disclosures of Asset Sales,” work-
ing paper, 2018. Around 40 percent of the companies analyzed disclosed their intention to divest some 
six months before the announcement of the divestment transaction itself. When the excess returns 
associated with that disclosure were considered, they added around 2.4 percent to the overall results 
estimated for divestiture announcements.