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Partial Price Adjustments and Equity Carve-Outs


  • Thomas H. Thompson


We examine the extent to which market-adjusted ex date returns reflect public information for 271 equity carve-outs in 1988-2006. Although prior studies focus on ex post determinants of equity carve-out and initial public offering returns, our study is the first to explore ex ante predictors of equity carve-out returns. We use three primary variables: filing range adjustments, the percentage of the offering used to retire subsidiary debt or to pay dividends, and the CBOE Volatility Index (VXO) to predict initial returns. We show that 11-35% of the variation in market-adjusted equity carve-out returns can be predicted using public information known prior to the offer date. Copyright (c) 2010, The Eastern Finance Association.

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  • Thomas H. Thompson, 2010. "Partial Price Adjustments and Equity Carve-Outs," The Financial Review, Eastern Finance Association, vol. 45(3), pages 743-759, August.
  • Handle: RePEc:bla:finrev:v:45:y:2010:i:3:p:743-759

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    Cited by:

    1. Thomas H. Thompson, 2016. "Underpricing, partial price adjustments, and equity carve-outs," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 40(2), pages 345-366, April.
    2. repec:eee:riibaf:v:43:y:2018:i:c:p:58-67 is not listed on IDEAS

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