The announcement effect of divestiture on stock returns of divesting firms: Evidence from Russian market

Abstract

The goal of the master thesis is to examine the effect of divestiture announcements on stock returns of Russian divesting firms. To achieve this goal the following objectives were set: analysis of literature in order to get a sense of using divestitures, reveal motives and drivers behind the decision to divest, as well as to investigate the market reaction of divestiture announcements based on the results of existing studies in the area, and event study analysis to identify the announcement effect of divestitures on stock returns of Russian publicly traded companies. The results are the following: there is a negative, however, insignificant effect of divestiture announcements on stock returns of Russian divesting firms; divestiture announcements with price disclosure of the deal have even larger negative, but significant, effect on stock returns of the firms than the divestiture announcements without the deal price information.