Visar Krasniqi Sustainable Value Creation by Strategic Divest- ments: A Capital Market Perspective Dissertation for obtaining the doctor degree of economic science (Dr. rer. pol.) at WHU – Otto Beisheim School of Management April 17, 2016 First Supervisor: Prof. Dr. Jürgen Weigand Second Supervisor: Prof. Dr. Lutz Kaufmann II Contents Contents....................................................................................................................... II 1 Introduction ..........................................................................................................1 1.1 Empirical motivation ...............................................................................................1 1.2 Clarification of terms ...............................................................................................3 1.3 Previous research in strategic divestments .............................................................5 1.4 Summary of achievements and limitations and open core questions......................8 1.5 Relevance of the telecommunications industry ..................................................... 11 1.6 Empirical research model ...................................................................................... 13 1.6.1 Study 1: Long-term market value development after divestments ................................. 13 1.6.2 Study 2: Relationship of short and long-term stock price reactions to divestment .......... 15 1.6.3 Study 3: Moderating parameters of divestment success ................................................ 17 1.7 Comprehensive conclusions on sustainable value creation by divestment ........... 19 2 Long-term capital market effects of divestments ...............................................21 2.1 Introduction........................................................................................................... 21 2.1.1 Demand for economically sustainable entrepreneurial development ............................. 21 2.1.2 Clarification of terms ..................................................................................................... 22 2.1.3 Study contextualization and research questions ............................................................ 26 2.1.4 Course of argumentation ............................................................................................... 27 2.2 Literature Review .................................................................................................. 28 2.2.1 Review method ............................................................................................................. 28 2.2.2 Review question 1: Theoretical perspectives on strategic divestments ........................... 31 2.2.3 Research question 2: Empirical perspectives and results on long-term post-divestment performance ............................................................................................................................... 42 2.3 Empirical research method .................................................................................... 51 2.3.1 Open Questions and hypotheses ................................................................................... 51 2.3.2 Statistical method ......................................................................................................... 53 2.3.3 Empirical data ............................................................................................................... 61 2.4 Empirical results .................................................................................................... 67 2.4.1 H1: Comparative CARs before and after divestment ...................................................... 67 2.4.2 H2: ANOVA analysis of CAR time-dependence ............................................................... 69 III 2.5 Discussion .............................................................................................................. 74 2.5.1 Summary and academic contextualization of empirical results ....................................... 74 2.5.2 Managerial implications ................................................................................................ 76 2.5.3 Limitations and further research.................................................................................... 77 3 Comparison of long and short-term capital market effects of strategic divestments ................................................................................................................79 3.1 Introduction........................................................................................................... 79 3.1.1 Strategic divestments – opportunity or escape? ............................................................ 79 3.1.2 Study contextualization and research questions ............................................................ 80 3.1.3 Course of argumentation ............................................................................................... 83 3.2 Literature Review .................................................................................................. 83 3.2.1 Review method ............................................................................................................. 83 3.2.2 Review question 1: Hypothesis on short-term post-divestment over or under- performance ............................................................................................................................... 86 3.2.3 Review question 2: Previous quantitative insights on short-term capital market effects . 93 3.2.4 Summary of review results .......................................................................................... 103 3.2.5 Overview of studies of short-term CARs....................................................................... 103 3.3 Empirical research method .................................................................................. 108 3.3.1 Open questions and hypotheses .................................................................................. 108 3.3.2 Statistical method ....................................................................................................... 109 3.3.3 Empirical data ............................................................................................................. 114 3.4 Empirical results .................................................................................................. 118 3.4.1 Distributions of CARs in the short run .......................................................................... 118 3.4.2 H3: Comparative CARs analysis for the pre-divestment and immediate divestment phases 119 3.4.3 H4: Comparative CARs in the divestment and prolonged post-divestment-phase ......... 122 3.4.4 H5: Correlation of long and short-term CARs after divestments ................................... 124 3.4.5 H6: Case study analysis of outliers ............................................................................... 126 3.5 Discussion ............................................................................................................ 131 3.5.1 Summary and academic contextualization of empirical results ..................................... 131 3.5.2 Managerial implications .............................................................................................. 132 3.5.3 Limitations and further research needs ....................................................................... 132 4 Moderating parameters of divestment success ................................................ 134 4.1 Introduction......................................................................................................... 134 IV 4.1.1 Discussion of shareholder value effects of strategic divestments ................................. 134 4.1.2 Study contextualization ............................................................................................... 135 4.1.3 Research questions and study design........................................................................... 138 4.2 Literature review of moderating parameters of divestment success ................... 140 4.2.1 Review Method ........................................................................................................... 140 4.2.2 Moderating parameters of M&A success/failure .......................................................... 142 4.2.3 Moderating parameters of divestment success/failure ................................................ 145 4.3 Summary of review results .................................................................................. 152 4.3.1 Overview of determinants of deal success ................................................................... 152 4.4 Model-building .................................................................................................... 158 4.4.1 Hypothesis development ............................................................................................. 158 4.4.2 Survey implementation ............................................................................................... 160 4.4.3 Statistical evaluation ................................................................................................... 166 4.5 Empirical results .................................................................................................. 170 4.5.1 Univariate results of success factors ............................................................................ 171 4.5.2 Regression models and hypotheses tests