An Investigation of the Gains from Specialized Equity Claims
37 Pages Posted: 16 Jun 2003
There are 2 versions of this paper
An Investigation of the Gains from Specialized Equity Claims
An Investigation of the Gains from Specialized Equity Claims
Date Written: March 21, 2003
Abstract
We investigate whether operating performance improves when a firm creates traded equity claims on a subsidiary without relinquishing control. We find that the change in a parent firm's operating performance following an equity carve-out is negatively related to the fraction of subsidiary shares that the parent firm retains after a carve-out. Operating performance of parent firms improves only when the parent completely divests its ownership of the subsidiary. We also find no improvement in operating performance following the creation of tracking stock. We conclude that corporate restructuring without relinquishing control of assets does not enhance operating performance.
Keywords: Corporate Restructuring, Tracking Stocks, Equity Carve-outs, Operating Performance
JEL Classification: G34, G32
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Reaction of Security Prices to Tracking Stock Announcements
By John Elder and Peter Westra
-
An Empirical Analysis of the Stockholder-Bondholder Conflict in Corporate Spin-Offs
-
An Investigation of the Gains from Specialized Equity Claims
By Audra L. Boone, David Haushalter, ...
-
Value Creation Through Spin-Offs: A Review of the Empirical Evidence
-
Wealth Gains from Tracking Stocks: Long-Run Performance and Ex-Date Returns
By Matthew J. Clayton and Yiming Qian
-
Corporate Divestitures and Spinoffs in Singapore
By Francis Koh, Winston T.h. Koh, ...