Activist-Led Divestitures

Friday, April 29
2:00-3:30pm
SB1 5100 Corp Partners Board Room

Emilie R. Feldman
Assistant Professor of Management
The Wharton School, University of Pennsylvania

Abstract
This study analyzes how the divestitures that are impelled by activist investors in their campaigns against public corporations affect shareholder value. Using hand-collected data on nearly 3,500 divestitures undertaken by Fortune 500 companies between 2007 and 2014, we find that activist-led divestitures are more positively associated with immediate and longer-term measures of shareholder value than comparable non-activist-led divestitures. These performance differences persist for over a year following the completion of these deals. Our results show how activist investors can shape firms divestiture decisions, with significant implications for corporate performance. Our work also sheds light on the phenomenon of activist investors and the ways in which these stakeholders might induce changes in firms corporate strategies.