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The Choice between Spin-offs and Sell-offs

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  • Nixon, Terry D
  • Roenfeldt, Rodney L
  • Sicherman, Neil W

Abstract

Spin-offs and sell-offs are alternative methods for divesting assets, but the effects on the parent firm differ substantially. We examine firms' characteristics that may influence the asset divestiture choice between a spin-off and sell-off. Results of the analysis indicate that the primary factors influencing the choice of divestiture type are financial distress, number of directors on the board, whether the CEO is also the Board Chair, and the size of the unit divested. Copyright 2000 by Kluwer Academic Publishers

Suggested Citation

  • Nixon, Terry D & Roenfeldt, Rodney L & Sicherman, Neil W, 2000. "The Choice between Spin-offs and Sell-offs," Review of Quantitative Finance and Accounting, Springer, vol. 14(3), pages 277-288, May.
    • Handle: RePEc:kap:rqfnac:v:14:y:2000:i:3:p:277-88
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    Citations

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    Cited by:

    1. Rolf Bühner & Jörg Digmayer, 2003. "Aktienmarktreaktionen auf die Ankündigungen von Spin-offs und Sell-offs," Schmalenbach Journal of Business Research, Springer, vol. 55(7), pages 657-677, November.
    2. Schweizer, Roger & Lagerström, Katarina, 2020. "Understanding a demerger process: The divorce metaphor," Scandinavian Journal of Management, Elsevier, vol. 36(1).
    3. Pearce, John A. & Patel, Pankaj C., 2022. "Reaping the financial and strategic benefits of a divestiture by spin-off," Business Horizons, Elsevier, vol. 65(3), pages 291-301.
    4. Erl, Ludwig & Kiesel, Florian & Koenigsmarck, Markus & Schiereck, Dirk, 2023. "Performance effects of sell-offs and the role of sell-off experience," The Quarterly Review of Economics and Finance, Elsevier, vol. 88(C), pages 244-257.
    5. Boulifa, Hichem & Uchida, Konari, 2022. "Like father, like son: Who creates listed subsidiaries?," Journal of the Japanese and International Economies, Elsevier, vol. 64(C).
    6. Decker, Carolin & Mellewigt, Thomas, 2007. "The drivers and implications of business divestiture: An application and extension of prior findings," SFB 649 Discussion Papers 2007-054, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    7. Prezas, Alexandros P. & Simonyan, Karen, 2015. "Corporate divestitures: Spin-offs vs. sell-offs," Journal of Corporate Finance, Elsevier, vol. 34(C), pages 83-107.
    8. Ma, Qing & Wang, Susheng, 2018. "Divestment options under tacit and incomplete information," Pacific-Basin Finance Journal, Elsevier, vol. 49(C), pages 15-29.

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