An Investigation of the Gains from Specialized Equity: Tracking Stock and Minority Carve-Outs
33 Pages Posted: 7 Jun 2001
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: Suggested Citation
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