Recovery after Demerger: Evidence from Romanian Companies

Constantin Duguleană (), Liliana Duguleana, Camelia Mirela Baba and Cristina Drumea
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Camelia Mirela Baba: Finance, Accounting and Economic Theory Department, Transilvania University of Brasov, 500036 Brasov, Romania

Sustainability, 2022, vol. 14, issue 3, 1-27

Abstract: The paper follows the demerger phenomenon in Romania in order to find out whether companies regain their economic performance after reorganization. The research is based on four samples of companies, divided into 2012, 2013, 2014, and 2015, that recorded their financial indicators in the period from 2005–2019. Using the financial indicators of companies that demerged in the same year, we analyzed the economic performances before and after the demergers, using statistical and econometric methods. The model with the fixed effects of the cross sections proved to be the most suitable for each panel, both for the entire analyzed period and for the two subperiods: ante and post demerger. The subperiod models are better than the panel econometric models for the entire period. The results show that all of the Romanian companies recovered after the demergers, and also to what extents. The validities of the econometric models confirm the sustainability of the economic activities after the demergers. This paper provides a study methodology and econometric models to investigate the demerger phenomenon among Romanian companies.

Keywords: demerger; financial ratios; panel data models; cross-sectional fixed effects; random effects; heterogeneity (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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