A Comparison of the Information Conveyed by Equity Carve-Outs, Spin-Offs, and Asset Sell-Offs
Posted: 25 Dec 1998
Date Written: July 1994
We examine valuation effects on firms in the same industry as entities that are the subject of carve-outs (initial public offerings of subsidiary equity), spin-offs, and asset sell-offs. Share price reactions for rivals are negative in response to equity carve-outs. In comparison, rival stock prices are positive for spin-offs and normal for asset sell- offs, restructuring actions that do not entail a public offering of equity. Our results suggest that managers conduct equity carve-outs when outside investors are likely to price the new shares higher than managers' perceived value.
JEL Classification: G34
Suggested Citation: Suggested Citation
Slovin, Myron B. and Sushka, Marie E. and Ferraro, Steven R., A Comparison of the Information Conveyed by Equity Carve-Outs, Spin-Offs, and Asset Sell-Offs (July 1994). Available at SSRN: https://ssrn.com/abstract=5493
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