Does value-based management facilitate managerial decision-making? An analysis of divestiture decisions

While recent studies indicate that value-based management (VBM) helps owners in aligning managerial interests (i.e., decision-influencing role), little evidence is provided for its support decision-making decision-facilitating role). We investigate whether the depth of VBM implementation and contextual factors may determine VBM’s role. our research question on a dataset 1,774 divestitures by European firms between 2005 2016. Divestitures allow analysis situations where self-interest less pronounced and, thus, role can be differentiated from Our empirical results down to business-unit level positively associated with divestiture returns, while we find no such effect if limited corporate level. Further tests this positive association contingent high dispersion costs capital across firm’s business portfolio. In sum, study indicates facilitate when consider firm-specific information needs.