Value Creation from Equity Carve-Outs

Financial Management, Vol. 31, No. 1, Spring 2002

Posted: 6 Mar 2002

See all articles by Heather M. Hulburt

Heather M. Hulburt

Bowling Green State University - Economics

James A. Miles

Pennsylvania State University - Department of Finance

J. Randall Woolridge

Pennyslvania State University

Abstract

Using a large sample of equity carve-out events during the 1980s and 1990s, we find that rivals of carve-out parent firms display negative announcement-period returns. This finding distinguishes the divestiture gains hypothesis from the asymmetric information hypothesis. Additional tests provide further support for the divestiture gains hypothesis. Operating performance improvements for both parents and their carved-out subsidiaries are evident.

Suggested Citation

Hulburt, Heather M. and Miles, James Alan and Woolridge, Joseph Randall, Value Creation from Equity Carve-Outs. Financial Management, Vol. 31, No. 1, Spring 2002. Available at SSRN: https://ssrn.com/abstract=300525

Heather M. Hulburt (Contact Author)

Bowling Green State University - Economics ( email )

Bowling Green, OH 43403
United States

James Alan Miles

Pennsylvania State University - Department of Finance ( email )

601K Business Admin. Bldg.
University Park, PA 16802
United States
814-863 3565 (Phone)

Joseph Randall Woolridge

Pennyslvania State University ( email )

University Park, PA 16802
United States
814-865-1160 (Phone)

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