Divestiture ? Good or Bad?
Many changes have occurred in the telecom industry in recent years. The US Stock Markets have seen many IPO?s, some mergers, and even a bankruptcy or two in this sector. The history of this sector goes deeper than this. One historic event, that was considered controversial at the time, was the divestiture of American Telephone & Telegraph, also known as AT&T or Ma Bell, in 1984. The break- up was a result of a settlement in 19821 between AT&T and the Department of Justice. The company was to be split into eight segments in an effort to spur innovation and competition in the market place. The ramifications of this split- up were a concern for customers as well as shareholders. There was much debate over how the divestiture would impact shareholders. Researching this issue is quite complicated since most of the companies that were created during the divestiture have subsequently merged into other companies. This is where the CRSP US Stock Database comes into play since it is one of the few financial databases that include delisted/inactive issues.