An Empirical Analysis of the Stockholder-Bondholder Conflict in Corporate Spin-Offs
"We analyze the effect of daily stock and bond abnormal returns around spin-off announcements. Over a three-day event window, we find statistically significant abnormal returns of 3.07% for stocks and 0.11% for straight bonds. Both stock and bond abnormal returns are higher for firms with lower interest and dividend payouts. Stock abnormal returns are also higher for firms with higher pre-spin-off leverage. Overall, we find that the firm value increase compensates for the wealth transfer effect and that bondholders' wealth is not reduced as a result of spin-off." Copyright 2008 Financial Management Association International..
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Volume (Year): 37 (2008)
Issue (Month): 1 (03)
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