Journal of Financial and Quantitative Analysis Vol. 25 No. 3 1990
Securityholder Taxes and Corporate Restructurings
Abstract
Previous studies have found that positive abnormal stock returns are associated with corporate spin-offs and divestitures. Using a simplified model of the process of investor tax trading, we show that an improvement in the value of the tax-timing option component of securities prices is a likely contributing factor to those abnormal returns. The analysis indicates that the same phenomenon also may be part of the explanation for the generally higher returns observed for spin-offs than for divestitures, both when leverage is and is not present in the restructuring transactions.
- DOI
- 10.2307/2330700
- Volume
- 25
- Issue
- 3
- Pages
- 341
- Sources
- crossref openalex