The reaction of security prices to tracking stock announcements

John Elder and Peter Westra ()

Journal of Economics and Finance, 2000, vol. 24, issue 1, 36-55

Abstract: This paper provides some empirical evidence on a relatively new and increasingly prevalent form of equity restructuring called tracking stock. We identify the effects associated with tracking stock announcements by excluding from our sample those announcement events that include other significant news announcements on the event date, such as announcements of acquisitions and earnings. For the 35 announcement events that fit this criteria, we find a mean abnormal return of over 3 percent in the two-day period surrounding the announced proposal to issue a tracking stock, with 30 of the 35 firms in the sample earning positive abnormal returns. Copyright Springer 2000

Date: 2000
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DOI: 10.1007/BF02759694

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