The Performance Effects of European Demergers

Tom Kirchmaier ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper examines security price reactions of European demergers. For a period ranging from one and a half years prior to the demerger announcement through to three years after the execution date, the relative performance of the parent, spin-off and the combined effect is analysed relative to the overall market performance. Significant announcement effects were established for a sample of 48 European demergers. In addition, significant positive long-term value creation, in particular in year 2 after the demerger, was found for the spin-off but not for the parent firm. While size has, on average, a decisive but inverse impact on performance for both parent and spin-off, takeover activity does not.

Keywords: Corporate restructuring; demerger; spin-off (search for similar items in EconPapers)
Date: 2003-05
New Economics Papers: this item is included in nep-com, nep-eec, nep-ent and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://cep.lse.ac.uk/pubs/download/dp0566.pdf (application/pdf)

Related works:
Working Paper: The performance effects of European demergers (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0566

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