Title page for ETD etd-04302011-225849

Document Type Master's Dissertation
Author Lugisani, Pascal
URN etd-04302011-225849
Document Title The impact of divestitures on companies share price and operating performance for companies listed on the JSE
Degree MBA
Department Gordon Institute of Business Science
Advisor Name Title
Ms K Chipp Supervisor
  • divestiture
  • variance
  • CAAR
Date 2010-11-10
Availability unrestricted

The backdrop of this study is derived from a paper by Dranikoff et al (2002). To illustrate their point, Dranikoff et al argue that farm owners actively and continuously prune dead and weak branches from their farm tress in order to keep them healthy. However, in comparison, Dranikoff argues that executives spend a lot of time acquiring business (planting trees and growing them) but rarely devote any attention to divesting them. As a consequence, their empirical findings indicate that the executives end up selling the business often too late and at a low price, sacrificing shareholder value.

This study investigates company’s portfolio restructuring activities. Specifically, the study aims to analyse company’s listed on the Johannesburg Securities Exchange (JSE) Stock Exchange. As in the analogy of a farmer, do these company’s keep planting trees and growing them? If they keep growing, is there any evidence that executives engage in pruning activities, to what extent and the overall impact of those activities.

Overall, divestitures have been researched across varying fields of study. Researchers have investigated the topic from a Strategic, Finance and Operational perspective. Their findings have returned varying results respectively. On their impact on company’s share price, these studies have indicated both positive and negative (although on a less regular basis) impact.

Copyright © 2010, University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria

Please cite as follows:

Lugisani, P 2010, The impact of divestitures on companies share price and operating performance for companies listed on the JSE, MBA dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-04302011-225849/>


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