Value-Creation Through Spin-Offs: Australian Evidence
28 Pages Posted: 1 Sep 2016
Date Written: August 31, 2016
We examine announcement effects and the long-run stock performance associated with spin-offs for companies listed on the Australian Securities Exchange (ASX). The 3-day announcement effect is a significantly positive 2.93%. Contrary to previous studies, we do not find any difference between ex post completed and non-completed spin-off announcements. The abnormal returns do not seem to be related to factors that were found significant in previous studies such as an increase in industrial or geographical focus, information asymmetry, and the amount of bank debt of the parent company. Australian spin-offs are associated with a positive long-run excess stock performance for up to 36 months after the spin-off. This effect is particularly strong for focus-increasing spin-offs.
Keywords: spin-offs; demergers; industrial focus; bank debt; information asymmetry
JEL Classification: G32; G34
Suggested Citation: Suggested Citation