Abstract

http://ssrn.com/abstract=1495277
 
 

References (44)



 
 

Citations (4)



 


 



Value Creation Through Spin-Offs: A Review of the Empirical Evidence


Chris Veld


Monash University

Yulia V. Veld-Merkoulova


Monash University - Department of Finance


International Journal of Management Reviews, Vol. 11, Issue 4, pp. 407-420, December 2009

Abstract:     
This paper reviews the literature on the factors that influence the wealth effects associated with the announcements of corporate spin-offs (also known as demergers). Meta-analysis is used to summarize the findings of 26 event studies on spin-off announcements. A significantly positive average abnormal return of 3.02% is found during the event window. Returns are higher for larger spin-offs, for divestments that are tax or regulatory friendly and for spin-offs that lead to an improvement of industrial focus. It is also found that spin-offs that are later completed are associated with lower abnormal returns than non-completed spin-offs. The second part of the paper overviews studies on the long-run stock price performance of spin-offs. Even though early studies find a long-run superior performance, this effect is no longer found in later studies that use more refined statistical tests.

Number of Pages in PDF File: 14

Accepted Paper Series


Date posted: October 28, 2009  

Suggested Citation

Veld, Chris and Veld-Merkoulova, Yulia V., Value Creation Through Spin-Offs: A Review of the Empirical Evidence. International Journal of Management Reviews, Vol. 11, Issue 4, pp. 407-420, December 2009. Available at SSRN: http://ssrn.com/abstract=1495277 or http://dx.doi.org/10.1111/j.1468-2370.2008.00243.x

Contact Information

Chris Veld (Contact Author)
Monash University ( email )
Building 11E
Clayton, Victoria 3800
Australia
Yulia V. Veld-Merkoulova
Monash University - Department of Finance ( email )
Building H
Caulfield, Victoria 3145
Australia
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