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Do Malaysian Focus-Increasing Spin-Off Firms Underperform?


Author Info

  • 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)

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    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.

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    Bibliographic Info

    Article provided by Penerbit Universiti Sains Malaysia in its journal Asian Academy of Management Journal of Accounting and Finance.

    Volume (Year): 8 (2012)
    Issue (Month): 1 ()
    Pages: 91-123

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    Handle: RePEc:usm:journl:aamjaf00801_91-123

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    Related research

    Keywords: spin-offs; share returns performance; market efficiency; focus;


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