Value creation from corporate divestitures: Evidence from European spin-offs over 1994-2006.

dc.contributorAalto Universityen
dc.contributorAalto-yliopistofi
dc.contributor.authorLehtonen, Tuomas
dc.contributor.departmentDepartment of Accounting and Financeen
dc.contributor.departmentLaskentatoimen ja rahoituksen laitosfi
dc.contributor.schoolKauppakorkeakoulufi
dc.contributor.schoolSchool of Economicsen
dc.date.accessioned2011-11-14T11:22:58Z
dc.date.available2011-11-14T11:22:58Z
dc.date.dateaccepted2009-01-13
dc.date.issued2008
dc.description.abstractABSTRACT Purpose of the study In this Thesis I evaluate the value creation from corporate divestitures by studying European spin-offs over the period 1994-2006. I check the abnormal returns to parent shareholders following a spin-off announcement, and try to explain these returns by regressing them against relative size of the spin-off, increase in industry and geographical focus and change in operating performance. I also measure the long-run abnormal returns for the parent and the spun off subsidiary over five years around the announcement and the industry adjusted change in operating performance following a completed spin-off. The role of these tests is to facilitate the analysis regarding the sources behind the value creation. Data The data used in this study was collected from several sources. The spin-off events and company details were taken from SDC Platinum, financial statement information from Thomson OneBanker Worldscope database and the stock price information from Datastream. All this data was collected for the parents, spun-off subsidiaries and benchmarks. The final sample for testing the announcement effects consisted of 164 European spin-offs of which 120 were completed. The samples for testing long-run abnormal returns and changes in operating performance became smaller as data was not available for all observations. Results I find positive and statistically significant cumulative abnormal returns of +1.83% to the shareholders of the parent companies over (-1,1) days around the spin-off announcement. This value increases to 1.92% when only the sample of completed spin-offs is evaluated and further to 2.38% in the sample of only focus increasing spin-offs. This value creation is significantly related to the relative size of the spin-off. Increase in industrial focus, increase in geographical focus and change in operating performance show no significant explanation power. I also find insignificant long run abnormal returns for each subperiod in the four-year period around the spin-off announcement. Similarly, the change in operating performance, measured as the change in industry-adjusted return on assets, is not significantly different from zero over a five-year period around the spin-off announcement.en
dc.ethesisid12017
dc.format.extent71
dc.format.mimetypeapplication/pdfen
dc.identifier.urihttps://aaltodoc.aalto.fi/handle/123456789/149
dc.identifier.urnURN:NBN:fi:aalto-201111151061
dc.language.isoenen
dc.locationP1 I
dc.programme.majorFinanceen
dc.programme.majorRahoitusfi
dc.subject.heleconrahoitus
dc.subject.heleconfinancing
dc.subject.heleconyhtiöittäminen
dc.subject.heleconspin-offs
dc.subject.helecondivestoinnit
dc.subject.helecondivestments
dc.subject.keywordspin-off
dc.subject.keyworddivestiture
dc.subject.keywordabnormal return
dc.subject.keywordoperating performance
dc.subject.keywordevent study
dc.titleValue creation from corporate divestitures: Evidence from European spin-offs over 1994-2006.en
dc.typeG2 Pro gradu, diplomityöfi
dc.type.dcmitypetexten
dc.type.ontasotMaster's thesisen
dc.type.ontasotPro gradu tutkielmafi
local.aalto.idthes12017
local.aalto.openaccessyes
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