Journal article
The Positive Announcement-Period Returns of Equity Carveouts: Asymmetric Information or Divestiture Gains?
The Journal of Business, Vol.75(1), pp.153-190
The Journal of Business
2002
DOI: 10.1086/323508
Abstract
Using a sample of 336 carveouts that occurred in the period 198097, this article shows that the announcement-period returns increase with the ratio of subsidiary to nonsubsidiary assets. This finding contradicts the asymmetric information model proposed by Nanda. Additional tests relate the returns to the following divestiture-based explanations proposed by Schipper and Smith and others: refocusing of the parent and subsidiary operations, financing of new and existing projects, reducing the complexity of stock valuation, and enabling an eventual spinoff or third-party acquisition. The combined evidence rejects the asymmetric information hypothesis and supports the divestiture gains hypothesis of carveouts.
Details
- Title: Subtitle
- The Positive Announcement-Period Returns of Equity Carveouts: Asymmetric Information or Divestiture Gains?
- Creators
- Anand M Vijh
- Resource Type
- Journal article
- Publication Details
- The Journal of Business, Vol.75(1), pp.153-190
- Publisher
- University of Chicago Press
- Series
- The Journal of Business
- DOI
- 10.1086/323508
- ISSN
- 0021-9398
- eISSN
- 1537-5374
- Language
- English
- Date published
- 2002
- Academic Unit
- Finance
- Record Identifier
- 9984380745802771
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