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Do Malaysian Focus-Increasing Spin-Off Firms Underperform?

Author

Listed:
  • Nadisah Zakaria

    (Salford Business School, The University of Salford, Manchester, M54WT United Kingdom)

  • Glen Christopher Arnold

    (Salford Business School, The University of Salford, Manchester, M54WT United Kingdom)

Abstract

This paper investigates whether increased corporate focus surrounding a spin-off is associated with abnormal short-run and long-run share return performance from January 1980 to April 2011. By looking at the share return performance of both focus-increasing and non-focus-increasing parent firms, we find evidence against the claims of the focus-increasing hypothesis. Our results show that focus-increasing parent firms significantly underperformed when compared to their counterparts in the non-focus-increasing sub-sample during the few days surrounding the announcement date, even after adjusting for firm size. We also observe that spin-offs by the focus-increasing entities fail to demonstrate abnormal performance in the long-run period of three years.

Suggested Citation

  • Nadisah Zakaria & Glen Christopher Arnold, 2012. "Do Malaysian Focus-Increasing Spin-Off Firms Underperform?," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 8(1), pages 91-123.
    • Handle: RePEc:usm:journl:aamjaf00801_91-123
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    File URL: http://web.usm.my/journal/aamjaf/vol8-1-2012/8-1-5.pdf
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    Cited by:

    1. P. A. Padmanabhan, 2018. "Do Demerger Announcements Impact Shareholders Wealth? An Empirical Analysis Using Event Study," Vision, , vol. 22(1), pages 22-31, March.

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