Abstract

http://ssrn.com/abstract=1140220
 
 

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Organizational Form, Information Collection, and the Value of the Firm


Eitan Goldman


Indiana University - Department of Finance

2005

Journal of Business, Vol. 78, No. 3, 2005

Abstract:     
In a multidivision firm, does the market collect less value-relevant information when the divisions are treated as a unit rather than when each division trades as a separate firm? We find that organizational form has a nontrivial impact on information collection. In particular, we find that a spin-off may lead to either an increase or a decrease in aggregate information collection. We further explore how this result affects firm value and the conditions for a value-increasing spin-off. Our results provide a novel rationale for why firms may choose to spin off a division or issue a tracking stock.

Keywords: Information, spin-off, divisions

JEL Classification: D82, G14, G30

Accepted Paper Series


Not Available For Download

Date posted: June 3, 2008  

Suggested Citation

Goldman, Eitan, Organizational Form, Information Collection, and the Value of the Firm (2005). Journal of Business, Vol. 78, No. 3, 2005. Available at SSRN: http://ssrn.com/abstract=1140220

Contact Information

Eitan Goldman (Contact Author)
Indiana University - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
812-856-0749 (Phone)
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