Policy uncertainty and aggregate industry divestitures
Date
2020-09-28
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
ORCID
Type
Thesis
Degree Level
Masters
Abstract
I examine whether policy uncertainty affects the extent of industry average divestitures using a U.S. sample of divestitures and find that policy uncertainty negatively affects divestiture deal value and deal frequency. I interpret this finding as evidence that during policy uncertainty divesting-firms are less likely to receive the expected price for their ‘to be divested’ assets, therefore, the managers of target firms that have the flexibility to wait (or option to delay divesting) may prefer delaying divesting until the policy-uncertainty is alleviated. There exists no significant cross-sectional variation (at industry level) with respect to this negative effect.
Description
Keywords
Policy uncertainty, Divestiture, Real option, BBD index
Citation
Degree
Master of Science (M.Sc.)
Department
Edwards School of Business
Program
Finance