IMPACT OF DIVESTITURE ANNOUNCEMENTS UPON SHAREHOLDER WEALTH CREATION DURING THE COVID-19 PERIOD: A STUDY OF DIVESTITURES ACROSS ALL INDUSTRIES IN INDIA.

Authors:

Mr. Arjun Rana, Dr. Meena Sharma

Abstract:

Traditionally, studies on shareholder wealth creation upon divestiture announcement have repeatedly found positive share price reactions to divestiture announcements. This paper tests this premise under the COVID-19 pandemic scenario for companies in India across all industries that undertook divestitures during the COVID-19 period. It finds that unlike traditional studies there are negative statistically insignificant abnormal returns upon divestiture announcement during the COVID-19 period. The authors associate this negative return upon divestiture announcement with a pessimistic opinion of the shareholders towards the event of a reduction in the company's size and its association with bleak chances of survival in these dire circumstances. This sets the COVID period apart from normal circumstances in the case of shareholder wealth creation upon divestiture announcement.

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