An examination of ex-ante factors and their influence on equity carve-out long-term performance

Thomas Thompson ()

Journal of Economics and Finance, 2013, vol. 37, issue 2, 159-172

Abstract: This study examines the influence of several ex-ante factors on three-year market-adjusted returns of two-stage carve-out combinations from 1988 to 2006. We observe that several factors maintain their significance over a three-year period after equity carve-out ex-dates. Also, we report that, contrary to Vijh (J Bus 75(1):153–190, 1999 ), negative three-year carve-out returns are statistically significant. In addition, we note that negative combination carve-out/spin-off three-year returns are higher than those of carve-outs acquired by third parties or reacquired by their parents. Moreover, we observe that our independent variables explain 14.56% of the multiple regression three-year returns for carve-outs. Also, our negative correlation of three-year returns with initial period returns supports the “leaning against the wind” hypothesis of Loughran and Ritter (Rev Financ Stud 15(2):413–443, 2002 ). In addition, our results for the post-bubble period (2001–2006) provide an extension of the changing issuer objective function noted by Loughran and Ritter (Financ Manage 35(3):23–51, 2004 ) for IPOs and Hogan and Olson (J Financ Res 27(4):521–537, 2004 ) for equity carve-outs. Copyright Springer Science+Business Media, LLC 2013

Keywords: Carve-outs; Spin-offs; Divestitures; G32; G34 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s12197-011-9175-x

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