THE PRICING OF EQUITY CARVE‐OUTS DURING THE 1990s

Hogan, Karen M.; Olson, Gerard T.

doi:10.1111/j.1475-6803.2004.00106.x

Cited by 28 publications

(21 citation statements)

References 18 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…He suggests that parents simply take the opportunity to issue carve-outs when the units are overvalued. Hogan and Olson (2004) study the underpricing of equity carve-outs and find that firms are willing to accept underpricing and that underpricing is related to the use of prestigious underwriters, the amount of stock dilution, and analyst coverage before the offering.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Valuation and Performance of Reacquisitions Following Equity Carve‐Outs

Gleason

Madura

Pennathur

2006

The Financial Review

View full text Add to dashboard Cite

While existing literature reports a positive market reaction to parent companies conducting carve-outs, we find that the response to carve-outs that are ultimately reacquired is negative or insignificant. Reacquired units perform considerably worse than those that are not reacquired. Thus, parents may perceive that the market does not recognize the potential of these poorly performing units, and reacquires them to capitalize on the parents' private information. The reacquisition announcement results in a favorable market reaction for the parents and the units. However, parents experience negative long-term buy-and-hold abnormal returns when they reacquire less than 100% of units' shares. Copyright 2006, The Eastern Finance Association.

show abstract

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Valuation and Performance of Reacquisitions Following Equity Carve‐Outs

Gleason

Madura

Pennathur

2006

The Financial Review

View full text Add to dashboard Cite

show abstract

“…Johnston and Madura (2009) also use such a dummy variable in their analysis of the effect of Sarbanes‐Oxley on the pricing of U.S. IPOs. This variable controls for the potential change in the issuer objective function during that period (Hogan and Olson, 2004). Finally, Market Return controls for the market conditions preceding the IPO.…”

Section: Data Sources Sample Selection and Methodologymentioning

confidence: 99%

On the Publicity of Two‐Stage Spin‐Offs and Equity Carve‐Outs

Chahine

Goergen

2011

The Financial Review

View full text Add to dashboard Cite

We investigate the effect of pre-offer publicity on ownership, pricing, and aftermarket performance for equity carve-outs (ECOs) and two-stage spin-offs (COSOs). Contrary to ECOs, for COSOs the parent firm's shareholders end up with free shares in the subsidiary. As the value of large share blocks is likely to be negatively affected by the emergence of new blocks after the divestiture, we hypothesize that parent firms undertaking COSOs may conduct more pre-offer publicity to attract more retail investors, keeping outside ownership diffuse and inflating aftermarket performance until the distribution of the free shares. We find empirical support for our hypotheses.

show abstract

“…They also underprice in order to successfully consummate the offering; Hogan and Olson (2004) show a first-day return of 13%. In addition, there are costs due to the 'disincentive' effect (Perotti and Rossetto, 2007).…”

Section: Reasons For Conducting a Carve-out And Its Acquisitionmentioning

confidence: 97%