This study examines the pre-and post-earnings performance of U. S. firms in the years prior to and following the foreign selloff announcement. The empirical findings suggest that while the parent firms have earnings declines in the years before the foreign selloff announcement, they experience significantly positive earnings changes in the years following the foreign selloff announcement. These results indicate that, on average, foreign selloff activity is associated with valuable operating performance and thus affects post-foreign selloff earnings performance favorably. Moreover, even after controlling for possible effects of industry trends, the empirical results continue to provide evidence of significant improvements in earnings performance of parent firms in years after foreign selloffs, thereby implying increases in operating efficiency relative to their industry counterparts. Overall, the empirical evidence supports the view that the sale of foreign operations detrimental to a total system could provide improved cash flows for the parent firm and also enhance operating efficiency within a multinational network of the parent firm.