Divestiture activity within the restaurant industry has increased in the last twenty years, however there is a dearth of research investigating the subsequent effects of the phenomenon. In particular none of the studies in the literature, have specifically examined the effects of restaurant firms' brand diversification strategies and systematic risk on shareholder wealth when controlling for divestiture completions. This research extends the knowledge from previous work on corporate unbundling and brand diversification strategies to the unique restaurant industry. Drawing on agency theory, the long- and short-term effects of the resulting brand diversification levels on firm shareholder wealth following a divestiture is examined. In addition, the effect of systematic risk on shareholder wealth following a divestiture is investigated. The study is applied to one of the leading U.S. restaurant firms, Brinker International, Inc., since the company has completed a number of divestitures that have resulted in a reduction of its brand diversification. Time series data from 1994 to 2013 is used in the study. The Wharton Research Data Services database and Brinker International, Inc.'s Securities and Exchange Commission annual and quarterly filings are utilized in acquiring the data for the study. Data analysis for the study consists of a cointegration error correction model. Specifically, the study's methodology includes unit root tests, cointegration, vector error correction, and causality tests for the proposed hypotheses. The results indicate that there is a long-run equilibrium relationship between shareholder wealth, brand diversification, and systematic risk. In addition, a short-term positive relationship exists between Brinker's level of systematic risk and divestiture completion. In addition, a negative short-term relationship is found between Brinker's brand diversification and shareholder wealth with divestiture completion. However, no statistically significant relationships are found between brand diversification, systematic risk, and shareholder wealth for Brinker in the short term. Overall, the study's model for the short-term explains 23.63% of the variance in Brinker's shareholder wealth. This study provides various theoretical and managerial implications for the restaurant literature, as well as, provides a catalyst for future studies to expand on the relationships between brand diversification, systematic risk, and shareholder wealth for restaurant firms when considering divestitures.


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Graduation Date





Croes, Robertico


Doctor of Philosophy (Ph.D.)


Rosen College of Hospitality Management

Degree Program

Hospitality Management









Release Date


Length of Campus-only Access

3 years

Access Status

Doctoral Dissertation (Open Access)


Rosen College of Hospitality Management