Divestiture and Firm Performance: A Meta-Analysis

Abstract

While numerous empirical studies have examined the relationship between corporate divestiture and subsequent firm performance, inconsistent findings persist, suggesting the need for a quantitative synthesis and an examination of potential moderating effects. The authors conduct a meta-analysis of the divestiture-performance relationship, encompassing 650 effect sizes from 94 studies. Results indicate that across studies, corporate divestiture does positively impact subsequent performance. The analysis also suggests statistically significant moderating effects of type of performance measure, transaction format, transaction intent, and firm’s resource level. While providing a quantitative synthesis of current empirical findings, the authors call for further research to surface additional moderators to refine the knowledge concerning the link between corporate divestiture and subsequent performance.