Spin-off Impact on Shareholder Wealth: A worldwide study on market reactions to spin-off announcements

Abstract

This thesis investigate the spin-off wealth effect and its determinant factors for spin-offs announced in the period 2000-2019. The sample is distributed over three regions; Europe, Asia-Pacific, and the US, with 103, 248 and 164 sample transactions, respectively. We conduct an event study and find a positive wealth effect during the three-day event window of 2.63%, 2.67% and 3.57% for the respective regions, significant at the 1% level. Through cross-sectional regressions, we find evidence that an increase in geographical focus and whether the spin-off later is completed are determinant factors for the wealth effect around announcement. Contrary to previous findings, we can not find evidence that industry focus or information asymmetry can explain short-term abnormal return.