Ex-post stock return behaviour of corporate restructurings and corporate control

Dongnyoung Kim and Tih Koon Tan

Review of Accounting and Finance, 2016, vol. 15, issue 4, 484-498

Abstract: Purpose - This paper aims to investigate the correlation between stock returns of the parent and newly created entity and the degree of return skewness in parents in the three different corporate restructurings. Design/methodology/approach - Using a sample of spin-offs, equity carve-outs and tracking stocks, ordinary least squares regression is used to test the relationship between stock return correlation as well as stock return skewness and the type of corporate restructurings. Findings - Tracking stock offering has the largest correlation in stock returns, whereas spin-off has the least correlation in stock returns. Also, the result from the skewness test is not consistent with the hypothesis that the stock returns skewness is positively related to the degree of ownership and control. Originality/value - This is one of the few papers looking at the three corporate restructurings and their return skewness.

Keywords: Corporate restructuring; Spin-off; Equity carve-out; Return behaviour; Tracking stock; G340; G390 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eme:rafpps:raf-05-2015-0066

DOI: 10.1108/RAF-05-2015-0066

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