Two-Stage Spinoff Asset Impairment Theory

41 Pages Posted: 17 Feb 2010 Last revised: 8 Mar 2012

See all articles by Ted F. Azarmi

Ted F. Azarmi

University of Tuebingen; Heilbronn University of Applied Science

David Marutschke

Soka University, Faculty of Business Administration; University of Tuebingen

Date Written: February 24, 2012

Abstract

This paper analyses two-step spinoff based on consequences of the expected future change in value of a stakeholder’s claim and its ability to block a restructuring. We show that a two-step spinoff allows an otherwise blocked value increasing (one-step) spinoff to take place by using the market information that a minority equity carve-out generates. We develop a corporate governance tool that advocates maximizing shareholder wealth considering the claim of another stakeholder under two-dimensional asymmetric information consisting of 1) unobservable asset impairment and 2) management conglomeration agency problem.

Keywords: Two-Stage Spinoff, Equity Carve-out, Restructuring, Divestiture, Multi-Dimensional Information Asymmetry, Agency Costs, Stakeholder Conflict

JEL Classification: G32, G34

Suggested Citation

Azarmi, Ted F. and Marutschke, David, Two-Stage Spinoff Asset Impairment Theory (February 24, 2012). Available at SSRN: https://ssrn.com/abstract=1553988 or http://dx.doi.org/10.2139/ssrn.1553988

Ted F. Azarmi (Contact Author)

University of Tuebingen ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany
(49) 16090 35 4021 (Phone)
(49) 7071 29 58 82 (Fax)

HOME PAGE: http://www.azarmi.org/forum

Heilbronn University of Applied Science ( email )

Max-Planck-Str. 39
Heilbronn, BW D-74081
Germany
49 7131-50 46697 (Phone)
49-7131-25 2470 (Fax)

HOME PAGE: http://www.hs-heilbronn.de/

David Marutschke

Soka University, Faculty of Business Administration ( email )

Tokyo, 192-8577
Japan

University of Tuebingen ( email )

Wilhelmstr. 19
72074 Tuebingen, Baden Wuerttemberg 72074
Germany

HOME PAGE: http://www.uni-tuebingen.de/

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