Divestitures often accompany acquisitions. Relying on a global sample, we provide support for the efficient restructuring view of acquisition-related divestitures. These divestitures add on average 2% to the total value creation of the acquisition process, translating into a value increase of $149 million. We test various efficiency channels potentially explaining this value contribution. The results indicate that the value contribution varies with the synergistic potential of the acquisition process. We do not find empirical support for efficiency-improvement related to agency correction, financial constraint relaxation, and regulatory concern anticipation. Examining returns for divestitures only, we find that those around acquisitions are not transactions with weak bargaining positions.

We provide evidence on the effect of personal shocks that reduce a CEO's expected career horizon on corporate policies. The timing of these events is not predictable based on observable characteristics, and affected CEOs experience greater turnover rates and shorter residual time-in-office. Following the shock, these firms moderate both R&D and capital expenditures and increase cash distributions. While these changes are consistent with greater short-term orientation, they are not detrimental to shareholders, as performance increases after the shock. Earnings management and firm risk remain unchanged, while both CEO total compensation and equity-based compensation decline. Overall, our results indicates that the improved performance comes from the implementation of more efficient firm policies, likely driven by an internal tournament effect after the shock rather than from opportunistic behavior.