The valuation effects of equity carve-outs

Meijui Sun and Pei-Gi Shu

Applied Economics Letters, 2011, vol. 18, issue 9, 887-891

Abstract: In an examination of 136 equity carve-outs in Taiwan in 1994-2007 we first find significantly positive stock price reactions associated with the announcements, consistent with the global findings. We further examine the sources of wealth gains on the basis of the asymmetric information hypothesis (Nanda, 1991) and the divestiture gains hypothesis (Schipper and Smith, 1986) and find that the results lend more support to the latter than the former. Specifically, two ramifications of the divestiture gains hypothesis are supported: firms that divest unrelated business (refocusing strategy hypothesis) and use the proceeds to undertake new investments (the investment strategy hypothesis) draw favourable market appraisals.

Date: 2011
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.informaworld.com/openurl?genre=article& ... 40C6AD35DC6213A474B5 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:18:y:2011:i:9:p:887-891

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20

DOI: 10.1080/13504851.2010.515196

Access Statistics for this article

Applied Economics Letters is currently edited by Anita Phillips

More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().