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| Author: | Woo, C. Y. Willard, G. E. Daellenbanch, U. S. |
| Title: | Spin-off performance: a case of overstated expectations? |
| Journal: | Strategic Management Journal
1992 : SEP, VOL. 13:6, p.433-447 |
| Index terms: | DIVESTMENT COMPANY OWNERSHIP SUBSIDIARY COMPANIES COMPANY PERFORMANCE PROFITABILITY |
| Language: | eng |
| Abstract: | Prior research on divestiture has found that spin-offs and sell-offs were associated with significant positive abnormal returns. However, these studies have not identified whether these benefits were expected to accrue to the divesting firm, the divested unit, or both. A recent study examined the performance as autonomous firms a sample of 51 voluntary spin-offs across a 6-year period. No change in pre- and post-spin-off performances were observed except for the decline in profitability return on assets (ROA). The effect of relatedness between the parent company and the spin-off was also examined. Previously unrelated divested units reported deterioration in performance. Implication for divestiture and restructuring programs are developed. |
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