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An examination of the impact of equity carve-outs on stockholder and bondholder wealth

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  • Thompson, Thomas H.
  • Apilado, Vince

Abstract

This study provides a comprehensive initial evaluation of the wealth transfer hypothesis as applied to the carve-out announcement and partial IPO on stockholders and bondholders from 1983 to 2002. Using daily security prices we show that such combinations have multi-faceted wealth transfers and wealth creation. Consistent with existing theory, we observe a wealth increase for stockholders and bondholders in the carve-out announcement period. In the carve-out period, we report a wealth loss for parent stockholders and bondholders, but a gain for subsidiary stockholders.

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  • Thompson, Thomas H. & Apilado, Vince, 2009. "An examination of the impact of equity carve-outs on stockholder and bondholder wealth," Journal of Economics and Business, Elsevier, vol. 61(5), pages 376-391, September.
    • Handle: RePEc:eee:jebusi:v:61:y::i:5:p:376-391
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    References listed on IDEAS

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    1. Chen, Jun & King, Tao-Hsien Dolly & Wen, Min-Ming, 2015. "Do joint ventures and strategic alliances create value for bondholders?," Journal of Banking & Finance, Elsevier, vol. 58(C), pages 247-267.

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    Keywords

    Carve-outs Wealth transfer;

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