A comparison of the information conveyed by equity carve-outs, spin-offs, and asset sell-offs

Myron B. Slovin, Marie Sushka, Steven R. Ferraro

Research output: Contribution to journalArticle

99 Citations (Scopus)

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 languageEnglish (US)
Pages (from-to)89-104
Number of pages16
JournalJournal of Financial Economics
Volume37
Issue number1
DOIs
StatePublished - 1995

Fingerprint

Equity carve-outs
Spin-offs
Sell-offs
Managers
Assets
Equity
Valuation effects
Subsidiaries
Investors
Perceived value
Public offering
Initial public offerings
Industry
Share prices
Price reaction
Stock returns

Keywords

  • Divestitures
  • Equity carve-outs
  • Restructuring
  • Sell-offs
  • Spin-offs

ASJC Scopus subject areas

  • Accounting
  • Strategy and Management
  • Economics and Econometrics
  • Finance

Cite this

A comparison of the information conveyed by equity carve-outs, spin-offs, and asset sell-offs. / Slovin, Myron B.; Sushka, Marie; Ferraro, Steven R.

In: Journal of Financial Economics, Vol. 37, No. 1, 1995, p. 89-104.

Research output: Contribution to journalArticle

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