Ex-post stock return behaviour of corporate restructurings and corporate control

Abstract

Purpose

This paper aims to investigate the correlation between stock returns of the parent and newly created entity and the degree of return skewness in parents in the three different corporate restructurings.

Design/methodology/approach

Using a sample of spin-offs, equity carve-outs and tracking stocks, ordinary least squares regression is used to test the relationship between stock return correlation as well as stock return skewness and the type of corporate restructurings.

Findings

Tracking stock offering has the largest correlation in stock returns, whereas spin-off has the least correlation in stock returns. Also, the result from the skewness test is not consistent with the hypothesis that the stock returns skewness is positively related to the degree of ownership and control.

Originality/value

This is one of the few papers looking at the three corporate restructurings and their return skewness.

Citation

Kim, D. and Tan, T.K. (2016), "Ex-post stock return behaviour of corporate restructurings and corporate control", Review of Accounting and Finance, Vol. 15 No. 4, pp. 484-498. https://doi.org/10.1108/RAF-05-2015-0066