Journal of Financial Economics Vol. 37 No. 1 1995
A comparison of the information conveyed by equity carve-outs, spin-offs, and asset sell-offs
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.
- DOI
- 10.1016/0304-405x(94)00796-4
- Volume
- 37
- Issue
- 1
- Pages
- 89-104
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref