This paper examines the wealth effects to parent company shareholders around the announcement of divisional management buyouts. Despite the relative absence of "arms-length" bargaining between buyer and seller, there is no evidence that divisional management buyouts result in reductions in parent company share prices. Instead, small, but statistically significant, wealth gains are found during the two-day period surrounding the buyout announcement. This evidence suggests that divisional buyouts reallocate ownership of corporate assets to higher-valued uses and that parent company stockholders share in the expected benefits of this change in ownership structure. Copyright 1989 by American Finance Association.
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Article provided by American Finance Association in its journal Journal of Finance.
Volume (Year): 44 (1989) Issue (Month): 4 (September) Pages: 953-70 Download reference. The following formats are available: HTML
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