An Investigation of the Gains from Specialized Equity: Tracking Stock and Minority Carve-Outs

33 Pages Posted: 7 Jun 2001

See all articles by David Haushalter

David Haushalter

Pennsylvania State University - Mary Jean and Frank P. Smeal College of Business Administration

Wayne H. Mikkelson

University of Oregon - Department of Finance

Date Written: May 29, 2001

Abstract

We examine companies that issue tracking stock or undertake a minority carve-out. These restructurings create equity claims on a business unit yet the parent retains control. Although the average announcement stock price effect is approximately 3%, our evidence implies that these equity restructurings do not lead to an improvement in operating performance. We conclude that corporate restructuring without a change in control of assets does not enhance operating performance. Like other research, our tests are unable to identify the reasons for the positive stock price effects of tracking stock and minority carve-out arrangements.

Keywords: equity restructuring, capital structure, tracking stock, equity carve-outs

JEL Classification: G32, G34

Suggested Citation

Haushalter, David and Mikkelson, Wayne H., An Investigation of the Gains from Specialized Equity: Tracking Stock and Minority Carve-Outs (May 29, 2001). Available at SSRN: https://ssrn.com/abstract=271691 or http://dx.doi.org/10.2139/ssrn.271691

David Haushalter

Pennsylvania State University - Mary Jean and Frank P. Smeal College of Business Administration ( email )

University Park, PA 16802
United States
814-863-7969 (Phone)
814-865-3362 (Fax)

Wayne H. Mikkelson (Contact Author)

University of Oregon - Department of Finance ( email )

Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403
United States

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