The Performance Effects of European Demergers
AbstractThis paper examines security price reactions of European demergers. For a period ranging from one and a half years prior to the demerger announcement through to three years after the execution date, the relative performance of the parent, spin-off and the combined effect is analysed relative to the overall market performance. Significant announcement effects were established for a sample of 48 European demergers. In addition, significant positive long-term value creation, in particular in year 2 after the demerger, was found for the spin-off but not for the parent firm. While size has, on average, a decisive but inverse impact on performance for both parent and spin-off, takeover activity does not.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0566.
Date of creation: May 2003
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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
Corporate restructuring; demerger; spin-off;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-12-07 (All new papers)
- NEP-COM-2003-12-07 (Industrial Competition)
- NEP-EEC-2003-12-07 (European Economics)
- NEP-ENT-2003-12-07 (Entrepreneurship)
- NEP-LAB-2003-12-07 (Labour Economics)
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