Can Takeover Losses Explain Spin-Off Gains?
Publication Date
8-24-1998
Abstract
This paper evaluates the conjecture that excess stock returns that have been documented around the announcement of corporate spin-offs represent, at least in part, the re-creation of value destroyed at the time of an earlier acquisition. We evaluate this question with a sample of spin-offs that originated as earlier acquisitions. At the time of the original acquisition, on average, announcement period returns to the bidder and the combined bidder and target firm are negative and significant. Additionally, announcement period returns at the time of the spin-off are negatively and significantly correlated with acquisition announcement period returns.
Document Type
Article
Disciplines
Finance
Source
SMU Cox School of Business Research Paper Series
Language
English
COinS
