Holding On Too Long? The Effects of Inertia on Divestiture Performance

Emilie Feldman, Management, The Wharton School

Abstract: This project considers how managerial inertia in divestiture decision-making affects the performance outcomes of these deals. Divestitures are an important form of corporate development activity, accounting for 30-40% of overall deal-making activity and consistently creating more operational gains and shareholder value for divesting firms than mergers and acquisitions (the reverse mode of corporate development) do for the firms that undertake that strategy. While there is increasing recognition of the importance of divestitures among both academics and practitioners, the literature on this topic remains relatively under-developed, suggesting an important opportunity for scholars studying this phenomenon.

Michelle Eckert is Marketing and Communications Coordinator for the Mack Institute, where she works to engage students, researchers, and corporate partners in opportunities for collaboration. Michelle received her B.A. in Art from Valparaiso University in 2007. Her background includes two AmeriCorps terms of service working to teach mathematics, computer literacy, and job readiness skills to out-of-school youth in Philadelphia, focusing particularly on promoting access to post-secondary education.