The performance of European equity carve-outs

Δασίλας, Απόστολος; Leventis, Stergios

doi:10.1016/j.jfs.2018.01.001

Cited by 11 publications

(3 citation statements)

References 48 publications

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“…The first reason is divestiture. By conducting equity carve-outs or spin-offs, parent companies can refocus on their core business, and thus improve their performances (Ahn and Walker 2007;Allen and McConnell 1998;Berger and Ofek 1995;Burch and Nanda 2003;Dasilas and Leventis 2018;Fuchs 2003;Hulburt et al 2002;Otsubo 2009;Slovin et al 1995). Consistent with this idea, they find that in the case of firms that are performing poorly, highly diversified, and leveraged as more likely to conduct divestitures, the stock market usually shows a positive abnormal return in response to the announcement of their divestiture.…”

Section: How Do Equity Carve-outs Enhance Shareholder Wealth?mentioning

confidence: 81%

Equity Carve-Outs, Dual Directors, and Internal Labor Markets

Fan

2022

IJFS

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Given the prevalence of dual directors who serve simultaneously on the parent as well as the subsidiary board, it is important to examine their functions, a topic largely ignored in the existing literature. Exploring the functions of dual directors highlights equity carve-out objectives other than strategic refocusing. To examine our hypothesis, we first conducted an event study to examine stock market reaction to carve-out decisions. In addition, we compared subsidiaries’ performance after carve-outs between firms with dual directors and their matching firms based on the propensity score. We find evidence that the Japanese stock market reacts positively to the presence of dual directors who hold CEO positions in carve-out subsidiaries, especially when they are relatively young. Additionally, we find that carve-out subsidiaries led by young dual directors tend to outperform their matched counterparts in the long run. In contrast, when dual directors do not hold the CEO position, we find no evidence of the stock market reacting positively to them. The results of this study suggest that young CEOs appointed from the internal labor markets care more about long-term reputation, and can enhance shareholder wealth of both parent and subsidiary firms.

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Section: How Do Equity Carve-outs Enhance Shareholder Wealth?mentioning

confidence: 81%

Equity Carve-Outs, Dual Directors, and Internal Labor Markets

Fan

2022

IJFS

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“…Mergers create value by active synergy, while spin-offs create value by effectively managing the resources of entity-specific units to achieve sustainability [1]. Dasilas and Leventis [7] prove that the spin-off listing has brought significant positive returns to the shareholders of the parent companies by asymmetric information hypothesis and asset-stripping hypothesis, but 2 years later, the market value of the parent companies declined. However, some scholars revealed that spin-off and listing can effectively improve the operating performance of parent companies and subsidiaries [2,11,14,15].…”

Section: Introductionmentioning

confidence: 99%

Value Creation of Real Estate Company Spin-off Property Service Company Listing

Zhang

Zhu

Wang

et al. 2021

Applied Mathematics and Nonlinear Sciences

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The paper took 12 groups of parent companies and subsidiaries as the samples, in which the property service companies, spun from the real estate companies, have successfully on the capital market. The research showed that the average abnormal return (AAR) of real estate companies’ stocks was positive on the first announcement date of possible spin-off listing, while the cumulative average abnormal return (CAAR) remained positive for 21 days during the (–11, 9) days around the first announcement of possible spin-off and listing. Further, the changes in operating performance of real estate companies and property service companies were analysed after the successful spin-off for 3 consecutive years, compared with the year before the spin-off and listing. The results showed that after the spin-off and listing, real estate companies and property service companies have greatly improved their performance. Therefore, the fact that real estate companies spun off property service companies created positive values for shareholders.

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“…A normal feature of equity carve outs is a positive impact on the wealth of parent company shareholders upon announcement (Dasilas and Leventis, 2018;Prezas and Simonyan, 2015). However, there are a number of stages in an equity carve out listing process apart from just the announcement, and therefore the possibility for further information discovery during these stages.…”

Section: Introductionmentioning

confidence: 99%