Corporate divestment in New Zealand.

The propensity of corporate executives and strategists to restructure their companies has intensified in recent years. Although a substantial literature, mainly overseas, has addressed the motives and economic consequences of mergers and acquisitions, comparatively little research has been directed towards corporate divestment activity, particularly in the Australasian region. This research investigates the motives for divestment, and some major factors influencing divestment decision-making of New Zealand listed companies. It highlights the importance of divestment as an integral aspect of corporate restructuring processes. An inter-disciplinary model of divestment has been developed and explored in this study. Three different but inter-related perspectives - industrial organisation economics; corporate strategy; and finance - capture the various dimensions of divestment activity hitherto unexplored in a single study. This study relied on mail survey questionnaire as a data collection method. The senior executives of leading companies listed on the New Zealand Stock Exchange were asked to indicate the relative importance of the divestment motives and factors affecting their companies I divestment activities for the past five financial years. Non-parametric statistical methods were employed to test the research hypotheses. The research results offer strong support for the conceptual model of divestment. This confirms the notion that selected environmental, organisational, and performance factors have significant influences on a firm I s motives for divestment, which in turn determines the corresponding divestment strategy formulation and implementation adopted by firms