An examination of the impact of equity carve-outs on stockholder and bondholder wealth
This study provides a comprehensive initial evaluation of the wealth transfer hypothesis as applied to the carve-out announcement and partial IPO on stockholders and bondholders from 1983 to 2002. Using daily security prices we show that such combinations have multi-faceted wealth transfers and wealth creation. Consistent with existing theory, we observe a wealth increase for stockholders and bondholders in the carve-out announcement period. In the carve-out period, we report a wealth loss for parent stockholders and bondholders, but a gain for subsidiary stockholders.
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- William F. Maxwell & Ramesh P. Rao, 2003. "Do Spin-offs Expropriate Wealth from Bondholders?," Journal of Finance, American Finance Association, vol. 58(5), pages 2087-2108, October.
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- Asquith, Paul & Mullins, David Jr., 1986. "Equity issues and offering dilution," Journal of Financial Economics, Elsevier, vol. 15(1-2), pages 61-89.
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