Abstract
We examine valuation effects on firms in the same industry as entities that are the subject of carve-outs (initial public offerings of subsidiary equity), spin-offs, and asset sell-offs. Share price reactions for rivals are negative in response to equity carve-outs. In comparison, rival stock returns are positive for spin-offs and normal for asset sell-offs, restructuring actions that do not entail a public offering of equity. Our results suggest managers conduct equity carve-outs when outside investors are likely to price the new shares higher than managers' perceived value.
Original language | English (US) |
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Pages (from-to) | 89-104 |
Number of pages | 16 |
Journal | Journal of Financial Economics |
Volume | 37 |
Issue number | 1 |
DOIs | |
State | Published - Jan 1995 |
Keywords
- Divestitures
- Equity carve-outs
- Restructuring
- Sell-offs
- Spin-offs
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics
- Strategy and Management