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Value-creation through spin-offs: Australian evidence

Author

Listed:
  • Daniel Chai

    (Department of Banking and Finance, Monash Business School, Monash University, Caulfield East, VIC, Australia)

  • Ziyang Lin

    (Currently unaffiliated)

  • Chris Veld

    (Department of Banking and Finance, Monash Business School, Monash University, Caulfield East, VIC, Australia)

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.

Suggested Citation

  • Daniel Chai & Ziyang Lin & Chris Veld, 2018. "Value-creation through spin-offs: Australian evidence," Australian Journal of Management, Australian School of Business, vol. 43(3), pages 353-372, August.
    • Handle: RePEc:sae:ausman:v:43:y:2018:i:3:p:353-372
    DOI: 10.1177/0312896217729728
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    More about this item

    Keywords

    Bank debt; demergers; industrial focus; information asymmetry; spin-offs;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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