Value-creation through spin-offs: Australian evidence

Daniel Chai, Ziyang Lin, Chris Veld

Research output: Contribution to journalArticleResearchpeer-review

Abstract

We examine announcement effects and the long-run stock performance associated with spin-offs for companies listed on the Australian Securities Exchange. The 3-day announcement effect is a significantly positive 2.93%. Contrary to previous studies, we find no differences between ex post completed and non-completed spin-off announcements. The abnormal returns do not seem to be related to factors found significant in previous studies, such as an increase in industrial or geographical focus, information asymmetry, and the amount of bank debt of the parent company. There is some evidence that Australian spin-offs are associated with a positive long-run excess stock performance for up to 24 months after the spin-off. This effect is mostly driven by focus-increasing spin-offs.

Original languageEnglish
Pages (from-to)353-372
Number of pages20
JournalAustralian Journal of Management
Volume43
Issue number3
DOIs
Publication statusPublished - 1 Aug 2018

Keywords

  • Bank debt
  • demergers
  • G32
  • G34
  • industrial focus
  • information asymmetry
  • spin-offs

Cite this

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Value-creation through spin-offs : Australian evidence. / Chai, Daniel; Lin, Ziyang; Veld, Chris.

In: Australian Journal of Management, Vol. 43, No. 3, 01.08.2018, p. 353-372.

Research output: Contribution to journalArticleResearchpeer-review

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