THE LONG-TERM PERFORMANCE OF PARENT FIRMS AND THEIR SPIN-OFFS

Byron J. Hollowell

The International Journal of Business and Finance Research, 2009, vol. 3, issue 1, 119-129

Abstract: This study examines the four-year stock performance of firms that undertake a spin-off. The theoretical motivations for spin-offs have been widely documented in the literature; however, an empirical examination of the aftermarket performance of spin-offs across a protracted bear market remains an unexamined topic. I find that spin-offs and their parents consistently outperform market indices from the closing price on the first day of public trading to their four-year anniversaries. These findings are important because the existence of price patterns during a market correction can serve as an investment hedge within a mean-variance efficient portfolio.

JEL-codes: G30 G38 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ibf:ijbfre:v:3:y:2009:i:1:p:119-129

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