Learning the wealth effects from equity carve-outs

Asad Iqbal Mashwani, Sébastien Dereeper, Michael Dowling and Saqib Aziz

Finance Research Letters, 2020, vol. 33, issue C

Abstract: We investigate how the market can provide early signals about the eventual effects of an equity carve-out on the wealth of parent firm shareholders. Using a sample of equity carve-outs from 1985–2015, we show that most wealth information regarding the IPO valuation of a subsidiary is observable in the share returns of the parent firm during the book-building period. Our study therefore adds timing and process understanding to existing studies showing a wealth impact of equity carve-outs on parent company shareholders.

Keywords: Equity carve-outs; Divestitures; Event studies; Wealth effects (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:33:y:2020:i:c:s1544612319302788

DOI: 10.1016/j.frl.2019.05.009

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