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Antitakeover provisions in corporate spin-offs

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  • Chemmanur, Thomas J.
  • Jordan, Bradford D.
  • Liu, Mark H.
  • Wu, Qun

Abstract

We analyze the relation between antitakeover provisions (ATPs) and the performance of spin-off firms. We find that firms protected by more ATPs before spin-offs have higher abnormal announcement returns and greater improvements in post-spin-off operating performance than firms with fewer ATPs. Further, firms that reduce the number of ATPs after spin-offs have greater improvements in operating performance than firms that do not reduce the number of ATPs. Finally, CEOs of pre-spin-off firms tend to retain more ATPs in parent firms and assign fewer ATPs to the spun-off units if they remain as the CEOs of the parents but not the spun-off units. Overall, our results indicate a positive relation between ATPs and the value gains to spin-offs.

Suggested Citation

  • Chemmanur, Thomas J. & Jordan, Bradford D. & Liu, Mark H. & Wu, Qun, 2010. "Antitakeover provisions in corporate spin-offs," Journal of Banking & Finance, Elsevier, vol. 34(4), pages 813-824, April.
    • Handle: RePEc:eee:jbfina:v:34:y:2010:i:4:p:813-824
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    Cited by:

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    2. Pegah Dehghani & Ros Zam Zam Sapian, 2014. "Sectoral herding behavior in the aftermarket of Malaysian IPOs," Venture Capital, Taylor & Francis Journals, vol. 16(3), pages 227-246, July.
    3. Justin Law & Wayne Yu, 2018. "Corporate spinoffs and executive compensation," Frontiers of Business Research in China, Springer, vol. 12(1), pages 1-25, December.
    4. Alessandro Carretta & Vincenzo Farina & Elvira Anna Graziano & Marco Reale, 2013. "Does Investor Attention Influence Stock Market Activity? The Case of Spin-Off Deals," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Alessandro Carretta & Gianluca Mattarocci (ed.), Asset Pricing, Real Estate and Public Finance over the Crisis, chapter 1, pages 7-24, Palgrave Macmillan.
    5. Chen, Sheng-Syan & Chen, I-Ju, 2012. "Corporate governance and capital allocations of diversified firms," Journal of Banking & Finance, Elsevier, vol. 36(2), pages 395-409.
    6. Nazir Saima & Chisti Khalid, 2023. "Corporate Spin-Offs and Shareholders’ Wealth: A Systematic Review and Future Research Agenda," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 11(1), pages 42-63, October.

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