Learning about Internal Capital Markets from Corporate Spin-offs  

Oleh:

Gertner, Robert ; Powers, Eric ; Scharfstein, David F.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 57 no. 6 (Dec. 2002), page 2479-2506.
Fulltext: p 2479.pdf (130.87KB)

Isi artikel

We examine the investment behavior of firms before and after being spun off from their parent companies. Their investment after the spin-off is significantly more sensitive to measures of investment opportunities ~e.g., industry Tobin’s Q or industry investment! than it is before the spin-off. Spin-offs tend to cut investment in low Q industries and increase investment in high Q industries. These changes are observed primarily in spin-offs of firms in industries unrelated to the parents’ industries and in spin-offs where the stock market reacts favorably to the spin-off announcement. Our findings suggest that spin-offs may improve the allocation of capital.

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