The art of the split: Activist-induced divestitures & corporate value creation

dc.contributorAalto Universityen
dc.contributorAalto-yliopistofi
dc.contributor.advisorPuttonen, Vesa
dc.contributor.authorKossila, Karla
dc.contributor.departmentRahoituksen laitosfi
dc.contributor.schoolKauppakorkeakoulufi
dc.contributor.schoolSchool of Businessen
dc.date.accessioned2024-08-25T16:07:35Z
dc.date.available2024-08-25T16:07:35Z
dc.date.issued2024
dc.description.abstractThis study investigates how and if hedge fund activists create value by breaking-up and splitting companies utilizing a sample of 3,834 divestitures in the U.S. between 1990-2024. We find activists create substantial value throughout their involvement in the corporate divestiture process, displaying up to 7.8% incremental cumulative abnormal returns from campaign to divestiture. Magnitudes of which are economically meaningful, amounting to approximately USD 1.2bn in incremental shareholder value. We show activists drive value creation by acting as external disciplinaries, pushing management to divest proportionally larger assets, otherwise outside managements core competencies and interests. Moreover, activists use their extensive experience and networks in the market for corporate control to influence divestiture execution, visible through enhanced market timing, increased probability of sale to a financial acquirer, and a tendency to utilize exotic structures such as spin-offs, and professional deal certainty enhancing transaction terms.en
dc.format.extent53 + 7
dc.identifier.urihttps://aaltodoc.aalto.fi/handle/123456789/130064
dc.identifier.urnURN:NBN:fi:aalto-202408255625
dc.language.isoenen
dc.locationP1 Ifi
dc.programmeFinanceen
dc.subject.keywordinvestor activismen
dc.subject.keywordhedge fundsen
dc.subject.keyworddivestituresen
dc.subject.keywordM&Aen
dc.subject.keywordcorporate financeen
dc.titleThe art of the split: Activist-induced divestitures & corporate value creationen
dc.typeG2 Pro gradu, diplomityöfi
dc.type.ontasotMaster's thesisen
dc.type.ontasotMaisterin opinnäytefi
local.aalto.electroniconlyyes
local.aalto.openaccessno
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