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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