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European spin-offs Origin, value creation, and long-term performance

Dmitri Boreiko () and Maurizio Murgia ()

No BEMPS05, BEMPS - Bozen Economics & Management Paper Series from Faculty of Economics and Management at the Free University of Bozen

Abstract: This paper tests the empirical validity of theoretical predictions on corporate spin-offs motivations and ex-post performance. Using a unique data set of completed spinoffs in twelve European countries we show that spin-off decisions are frequently triggered by firm’s governance changes, such as the appointment of a new CEO or a takeover threat. Post-transaction long-run stock returns and operating performance are observed for spin-off firms only, and mostly for internally-grown business units and parent-related (non-focusing) subsidiaries. We find no evidence that post-spin-off mergers of either parents or subsidiaries enhance long-term performance, or that focus-increasing spin-offs lead to efficiency improvements.

Keywords: Spin-offs; Long-run performance; European corporate finance. (search for similar items in EconPapers)
JEL-codes: G14 G32 G34 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2013-06
New Economics Papers: this item is included in nep-bec, nep-ent, nep-eur and nep-sbm
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