The Effect of Voluntary Spin-Offs on Stock Prices: The Anergy Hypothesis

Advances in Financial Planning and Forecasting, pp. 265-292, 1985

27 Pages Posted: 19 May 2006

See all articles by Scott C. Linn

Scott C. Linn

University of Oklahoma - Michael F. Price College of Business

Michael S. Rozeff

SUNY at Buffalo - Department of Financial & Managerial Economics

Abstract

This study investigates the corporate spin-off. It provides the institutional details of the spin-off, an analysis of alternative hypotheses to explain spin-offs, and an event study. In addition, it contains a detailed analysis of the motives for spin-offs as provided by the companies. Anergy is the opposite of synergy, a diseconomy present in a company that can be removed by spinning off a portion of the company. The evidence suggests that anergies are present in many spin-offs and help account for their occurrence.

Keywords: spin-off, diseconomy, anergy, event study

JEL Classification: G34

Suggested Citation

Linn, Scott C. and Rozeff, Michael S., The Effect of Voluntary Spin-Offs on Stock Prices: The Anergy Hypothesis. Advances in Financial Planning and Forecasting, pp. 265-292, 1985. Available at SSRN: https://ssrn.com/abstract=903410

Scott C. Linn

University of Oklahoma - Michael F. Price College of Business ( email )

307 West Brooks
Norman, OK 73019-4004
United States
405-325-3444 (Phone)
405-325-1957 (Fax)

Michael S. Rozeff (Contact Author)

SUNY at Buffalo - Department of Financial & Managerial Economics ( email )

Buffalo, NY 14260
United States

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