Domestic or international: Divestitures in Australian multinational corporations

Abstract

Here we consider recent divestments made by Australian firms with subsidiaries in both domestic and overseas markets. When these companies divest, they are faced with the choice of selling a unit either in Australia or internationally. In this paper we analyze that decision and our results show that firms that elect to divest overseas are highly geographically diversified, large and with low dividend yield when compared to firms that choose to divest within Australia. We also find some evidence that these firms are using divestitures to exit from non-core business areas and streamline their operations. © 2006 Elsevier Inc. All rights reserved.