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Is There Shareholder Expropriation in the U.S.? An Analysis of Publicly-Traded SubsidiariesVladimir A. AtanasovCollege of William and Mary - Mason School of Business Audra L. BooneTexas A&M University - Department of Finance David HaushalterPennsylvania State University - Mary Jean and Frank P. Smeal College of Business Administration June 1, 2008 Journal of Financial and Quantitative Analysis (JFQA), Vol. 45, No. 1, 2010 Abstract: This paper examines the relation between the performance and valuations of publicly-traded subsidiaries in the United States and the ownership stake of their parent companies. Cross-sectional and time-series tests demonstrate that subsidiaries in which the parent owns a substantial minority stake exhibit negative peer-adjusted operating performance and are valued at a 23% median discount relative to peers. In contrast, majority-owned and fully divested subsidiaries show no abnormal performance or valuations. The results of our study indicate that the association between parent ownership and subsidiary performance is nonlinear and that some parents do, in fact, behave opportunistically toward their publicly traded subsidiaries.
Number of Pages in PDF File: 51 Keywords: ownership structure, expropriation, consolidation, equity carve-out JEL Classification: G32, G34 Accepted Paper SeriesDate posted: March 19, 2005 ; Last revised: March 21, 2012Suggested CitationContact Information
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