The primary functions of corporate headquarters in multi-business firms are for entrepreneurial value creation and administrative loss prevention. A prominent way in which firms can renew their resources and capabilities is through divestitures. While the positive effects of divestitures on parent companies are well documented, we know relatively less about the comparative assessment of different divestiture governance modes. To address this research gap, we focus on a comparative assessment of two divestiture governance modes — corporate spin-offs and equity carve-outs — and examine under what conditions each divestiture governance mode is more likely to benefit the parent company. Five divestiture corporate goals are identified: address business unit underperformance, recover from corporate parent funding deficit, reduce liability risk, parent company's managerial refocus, and respond to third-parties' interactions. We also explore two boundary conditions that influence the corporate parent's divestiture governance mode choice, namely potential economic holdup problems between the parent company and the divested business unit, and uncertainty in divested business unit performance. We organize these managerial goals and boundary conditions within four transaction cost economics and real options themes, i.e., adaptability, contract law, incentive intensity, and intertemporal spillovers to explain and predict corporate parents' divestiture governance mode choice, and suggest research opportunities to further join transaction cost economics and real options theory for explaining corporate strategy more generally, and the parent company's divestiture governance mode choice of corporate spin-offs and equity carve-outs, in particular.