Learning the wealth effects from equity carve-outs

Asad Iqbal Mashwani, Sébastien Dereeper (), Michael Dowling and Saqib Aziz
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Asad Iqbal Mashwani: SKEMA Business School
Sébastien Dereeper: SKEMA Business School, Université Lille Nord (France)
Michael Dowling: ESC [Rennes] - ESC Rennes School of Business

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Abstract: We investigate how the market can provide early signals about the eventual effects of an equity carve-out on the wealth of parent firm shareholders. Using a sample of equity carve-outs from 1985–2015, we show that most wealth information regarding the IPO valuation of a subsidiary is observable in the share returns of the parent firm during the book-building period. Our study therefore adds timing and process understanding to existing studies showing a wealth impact of equity carve-outs on parent company shareholders.

Keywords: Equity carve-outs; Divestitures; Event studies; Wealth effects (search for similar items in EconPapers)
Date: 2020-03
Note: View the original document on HAL open archive server: https://rennes-sb.hal.science/hal-03004469
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Published in Finance Research Letters, 2020, 33, pp.101191. ⟨10.1016/j.frl.2019.05.009⟩

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Journal Article: Learning the wealth effects from equity carve-outs (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03004469

DOI: 10.1016/j.frl.2019.05.009

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