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Is There Shareholder Expropriation in the United States? An Analysis of Publicly Traded Subsidiaries

  • Atanasov, Vladimir
  • Boone, Audra
  • Haushalter, David
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    This paper examines the relation between the performance and valuations of publicly traded subsidiaries in the United States and the ownership stake of their parent companies. Cross-sectional and time-series tests demonstrate that subsidiaries of parents that own a substantial minority stake exhibit negative peer-adjusted operating performance and are valued at a 23% median discount relative to peers. In contrast, majority-owned and fully divested subsidiaries show no abnormal performance or valuations. The results of our study indicate that the association between parent ownership and subsidiary performance is nonlinear and that some parents behave opportunistically toward their publicly traded subsidiaries.

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    Article provided by Cambridge University Press in its journal Journal of Financial and Quantitative Analysis.

    Volume (Year): 45 (2010)
    Issue (Month): 01 (February)
    Pages: 1-26

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    Handle: RePEc:cup:jfinqa:v:45:y:2010:i:01:p:1-26_00
    Contact details of provider: Postal: Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK
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