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dc.contributor.author
Badola, Sotiria
en
dc.date.accessioned
2015-06-12T12:18:50Z
dc.date.available
2015-09-27T05:57:14Z
dc.date.issued
2015-06-12
dc.identifier.uri
https://repository.ihu.edu.gr//xmlui/handle/11544/293
dc.rights
Default License
dc.title
Valuation effects of Equity Carve-Outs in Europe
en
heal.type
masterThesis
heal.language
en
heal.access
free
el
heal.license
http://creativecommons.org/licenses/by-nc/4.0
heal.recordProvider
School of Economics, Business Administration and Legal Studies, MSc in Banking and Finance
heal.publicationDate
2012-05
heal.bibliographicCitation
Badola Sotiria ,2012, Valuation effects of Equity Carve-Outs in Europe, Master's Dissertation, International Hellenic University
en
heal.abstract
The objective of this paper is to examine the valuation effects of equity carve-outs occurring in Europe between the time period 1998 to 2011. The stock market reaction and operating performance of parent firms selling equity in a wholly owned subsidiary, known as equity-carve-out, are investigated. The methodology used in this paper is separated in the stock market effects examining the announcement effects of equity carve-outs and the operating performance effects methodology. According the stock market effects methodology short-run horizon effects are examined using both the Market Model Abnormal Return approach and the Market Adjusted Model Abnormal Return approach in order to find statistically significant abnormal returns. The empirical results show evidence for value creation and efficiency improvement in the short-run surrounding the announcement date. The findings supports the empirical results of previous research studies such as Langenbach (2001), but also empirical results on US data of Shipper and Smith (1986), Klein, Rosenfeld and Beranek (1991), Hand and Skantz (1998), Allen and McConnel (1998), Chemmanur and Paegalis (2000), and Haushalter and Mikkelson (2001). Additionally this paper provides empirical evidence in respect to the long-term stock market effect, examining Buy-and-Hold Abnormal Return. Empirical results show a highly significant underperformance of parent stock in the first year after the carve-out, where in the subsequent year, two-year period following the event highly significant positive abnormal returns are found. Moreover, it is shown that parent firms are more profitable as result of the equity carve-out.
en
heal.tableOfContents
Abstract .............................................................................................................................. I Acknowledgements ............................................................................................................ I Table of Figures .............................................................................................................. IV Table of Tables ................................................................................................................. V 1. Introduction ................................................................................................................ 1 2. Literature Review ....................................................................................................... 4 2.1. Definition and Characteristics .................................................................................... 4 2.2. Reasons and motivations for equity carve-outs ......................................................... 8 2.2.1. Value creation ........................................................................................... 10 2.2.2. Information asymmetries ........................................................................... 12 2.2.3. Fund raising hypothesis ............................................................................ 12 2.3. Sources of value creation ......................................................................................... 14 2.3.1. Increase of cash flows ............................................................................... 15 2.3.2. Reduction of capital costs ......................................................................... 15 2.3.3. Disclosure of hidden reserves ................................................................... 16 2.3.4. Reduction of information asymmetries ..................................................... 16 2.4. Announcement effect for European carve-outs ....................................................... 17 2.5. Long-term performance effects ................................................................................ 18 3. Sample selection and Methodology ......................................................................... 22 3.1. Sample selection ...................................................................................................... 22 3.2. Stock Market Effects Methodology ......................................................................... 25 3.2.1. Short-term event study method ................................................................. 26 3.2.2. Long-term event study method ................................................................. 28 3.3. Operating Performance Effects Methodology ..................................................... 30 3.3.1. Measures of Operating Performance ......................................................... 30 4. Data Analysis & Results .......................................................................................... 32 4.1. Results of short-term stock market effects analysis ................................................. 32 4.2. Results of long-term stock market effects analysis .................................................. 37 4.3. Results of long-term operating performance analysis ............................................. 38 5. Conclusion ............................................................................................................... 43 6. References ................................................................................................................ 46 7. Appendix .................................................................................................................. 52
en
heal.advisorName
Dasilas, Apostolos
en
heal.committeeMemberName
Leventis, Stergios
en
heal.committeeMemberName
Prof. Pasiouras, Fotios
en
heal.committeeMemberName
Giamouridis, Daniel
en
heal.academicPublisher
School of Economics and Business Administration, Msc in Banking and Finance
en
heal.academicPublisherID
ihu
heal.numberOfPages
60
heal.fullTextAvailability
true


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