Andias Eka Puspita Putri, Nadia Asandimitra

(Department of Management, Faculty of Economics, Surabaya State University, Indonesia)

 

 

Abstract: The purpose of this study is to explain whether there is a market reaction to the announcement of the divestiture and to determine whether the content of the announcement, especially divestment transaction characteristics affects cumulative abnormal return (CAR). Based on the research using one sample t-test shows that there is a market reaction at t-2. Then proceed with the analysis of one sample t test to test CAR parent company since t-2. Results show thatCARt-2t1, CAR-2t2 and CAR2t3 are significant. The three interval CARs are used as the dependent variables in the regression test. While the independent variables consist of relative size, transaction value, focus motive and diversification. F statistics of multiple linier regression shows that three models are not significant. It means that the announcement of sell offs is important but the content of this announcement included the divestment transaction characteristics are not considered for decision-making.

 

 

Key words: divestiture; sell offs; abnormal return; transaction value; focus motive; market reaction

 

JEL codes: G14, G17, G34