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Learning the wealth effects from equity carve-outs

Author

Listed:
  • Asad Iqbal Mashwani

    (SKEMA Business School)

  • Sébastien Dereeper

    (SKEMA Business School, Université Lille Nord (France))

  • Michael Dowling

    (ESC [Rennes] - ESC Rennes School of Business)

  • Saqib Aziz

    (ESC [Rennes] - ESC Rennes School of Business)

Abstract

We investigate how the market can provide early signals about the eventual effects of an equity carve-out on the wealth of parent firm shareholders. Using a sample of equity carve-outs from 1985–2015, we show that most wealth information regarding the IPO valuation of a subsidiary is observable in the share returns of the parent firm during the book-building period. Our study therefore adds timing and process understanding to existing studies showing a wealth impact of equity carve-outs on parent company shareholders.

Suggested Citation

  • Asad Iqbal Mashwani & Sébastien Dereeper & Michael Dowling & Saqib Aziz, 2020. "Learning the wealth effects from equity carve-outs," Post-Print hal-03004469, HAL.
    • Handle: RePEc:hal:journl:hal-03004469
    DOI: 10.1016/j.frl.2019.05.009
    Note: View the original document on HAL open archive server: https://rennes-sb.hal.science/hal-03004469
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