Divestitures to Unit Managers and Shareholder Wealth

Document Type



Published by Wiley-Blackwell in the Journal of Financial Research, volume 13 issue 2, 1990. Bryant users may access this article here.


The impact on shareholder wealth from selling units to management is examined. The two-day announcement period average abnormal return for parent firms divesting units to managers of those units is positive (0.80 percent) and significant. On average, the impact on shareholder wealth of parent firms divesting assets to managers of the unit is similar to the shareholder wealth effect for divestiture to third parties.