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The Wealth Effects Of Tracking Stock Restructurings


  • Matthew T. Billett
  • Anand M. Vijh


We provide a comprehensive examination of the post-issue wealth effects of 29 completed tracking stock restructurings. We document that for the parent stock and for the combined firm, tracking stock restructurings lead to insignificant long-term excess returns. However, we find that shareholders of tracking stocks realize significant post-issue wealth losses. Unlike spin-offs and carve-outs, announcements of tracking stock restructurings are preceded by negative one-year excess returns, and unlike the positive post-issue long-term excess returns to spin-off stocks and the insignificant long-term excess returns to carve-out stocks, tracking stocks experience negative long-term excess returns. 2004 The Southern Finance Association and the Southwestern Finance Association.

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  • Matthew T. Billett & Anand M. Vijh, 2004. "The Wealth Effects Of Tracking Stock Restructurings," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 27(4), pages 559-583.
  • Handle: RePEc:bla:jfnres:v:27:y:2004:i:4:p:559-583

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    References listed on IDEAS

    1. Kenneth A. Kavajecz, "undated". "A Specialist's Quoted Depth as a Strategic Choice Variable," Rodney L. White Center for Financial Research Working Papers 12-96, Wharton School Rodney L. White Center for Financial Research.
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    Cited by:

    1. Wei He & Tarun Mukherjee & Peihwang Wei, 2009. "Agency problems in tracking stock and minority carve-out decisions: Explaining the discrepancy in short- and long-term performances," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 33(1), pages 27-42, January.
    2. Fama, Eugene F. & French, Kenneth R., 2004. "New lists: Fundamentals and survival rates," Journal of Financial Economics, Elsevier, vol. 73(2), pages 229-269, August.

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