<p>Background: A spin-off is strategic instrument used to restructure an organisation and thereby maximize shareholder value. Theory and advocates argue that engaging in spin-offs will generate improved financial performance of the parent company as well as for the divested unit. Previous studies on the topic have primarily focused on the perspective of the parent com-pany and little attention has been given to the post spin-off performance of the divested unit, in particular on the Swedish market. Consequently this study will focus on the performance of divested units of spin-offs performed on the Swedish market.</p><p>Purpose: The purpose of this study is to compare the financial performance of the divested unit prior versus post the spin-off event in order to find poten-tial performance alterations.</p><p>Method: The study is conducted through an inductive approach based on quanti-tative data. In order to fulfil the purpose of comparing the financial per-formance, four financial ratios are used; Return on Assets, Market-to- book ratio, Sales Growth and Share Price. Statistical sign-tests are subse-quently conducted in order to find possible significant alterations in the financial performance.</p><p>Results: The results of the statistical tests all show unified findings in which no statistical significant change in performance post the spin-off event can be found. However negative tendencies are found for Return on Assets and positive tendencies were found for the variables M/B ratio and Sales Growth. The fourth variable, Sales Growth does not show a tendency in any direction. Similar results were found when classifying the sample into relative size and timing of the spin-off event.</p><p>Conclusion: Spin-offs on the Swedish market do not on average perform better as stand alone units. Vague positive tendencies could however be found on the variables connected to market expectations, and negative tendencies could be found for the variables measuring efficiency and profitability.</p>

Background: A spin-off is strategic instrument used to restructure an organisation and thereby maximize shareholder value. Theory and advocates argue that engaging in spin-offs will generate improved financial performance of the parent company as well as for the divested unit. Previous studies on the topic have primarily focused on the perspective of the parent com-pany and little attention has been given to the post spin-off performance of the divested unit, in particular on the Swedish market. Consequently this study will focus on the performance of divested units of spin-offs performed on the Swedish market. Purpose: The purpose of this study is to compare the financial performance of the divested unit prior versus post the spin-off event in order to find poten-tial performance alterations. Method: The study is conducted through an inductive approach based on quanti-tative data. In order to fulfil the purpose of comparing the financial per-formance, four financial ratios are used; Return on Assets, Market-to- book ratio, Sales Growth and Share Price. Statistical sign-tests are subse-quently conducted in order to find possible significant alterations in the financial performance. Results: The results of the statistical tests all show unified findings in which no statistical significant change in performance post the spin-off event can be found. However negative tendencies are found for Return on Assets and positive tendencies were found for the variables M/B ratio and Sales Growth. The fourth variable, Sales Growth does not show a tendency in any direction. Similar results were found when classifying the sample into relative size and timing of the spin-off event. Conclusion: Spin-offs on the Swedish market do not on average perform better as stand alone units. Vague positive tendencies could however be found on the variables connected to market expectations, and negative tendencies could be found for the variables measuring efficiency and profitability.

<p>This dissertation examines what drives firms' divestiture activity and how it impacts their performance. Divestitures is defined here as the sale, spin-off or liquidation of assets from an ongoing organization. This dissertation seeks to understand what drives firms' reconfiguration activities via divestitures, and in turn how the divestiture activity impacts the future performance in terms of survival and growth. The dissertation identifies differences in the performance of a firm relative to their prior performance as a driver for divestitures, as well as other financial constraints. Moreover, it shows that, counter-intuitively, divestitures are a tool for growth and helps strong firms continue to grow and helps them avoid becoming a target for acquisitions; whereas in the case of weak firms, divesting does not help them avoid shutting down. This dissertation argues that divestitures are tools firms use to reconfigure and reallocate their financial and managerial resources; in the case of weak firms, divestitures are a mode used primarily to free the necessary monetary funds necessary for firms to address problems and regain competitiveness, whereas for strong firms divestitures are a tool to free scarce managerial resources that can be more efficiently allocated in areas that can provide further growth. This dissertation contributes to our understanding of what drives firms divestitures and corporate strategic decisions in general, and provides evidence that even firms coming from positions of strength can eliminate parts of the organization as a way to grow.</p> / Dissertation

This study investigates the determinants of divestitures, the impact of divestitures on shortterm firm value and the determinants of divestiture returns in South Africa. The study is based on a sample of 46 non-financial firms listed on the Johannesburg Stock Exchange (JSE) between 2000 and 2014. Logit regressions found CEO Turnover, a measure of corporate focus and Return on Assets (ROA), a measure of corporate efficiency, to be the only statistically significant determinants of divestitures in South Africa. However, Sales growth, Return on Equity (ROE), Debt to Total Assets (D-t-A), Debt to Equity (D-t-E), the current ratio, and the interest coverage ratio did not possess statistical significance as determinants of divestitures in South Africa. The study also investigated the impact of divestitures on short-term shareholder wealth and found that divestitures have a statistically significant positive impact on short-term firm value in South Africa. Finally, the study also investigated the determinants of divestiture returns. Cross-sectional regressions conducted on the full sample of divesting firms found that leverage has a statistically significant effect on divestiture returns in South Africa; however, firm size and efficiency do not have a statistically significant effect on divestiture returns. In order to further understand the determinants of divestiture returns in South Africa the study also separated the portfolio of divesting firms into subsamples. The study found that larger firms report superior abnormal returns than smaller firms, firms with lower levels of efficiency report superior abnormal returns than firms with higher levels of efficiency, and highly-levered firms report superior abnormal returns than lower-levered firms in South Africa.

<p><strong>Syfte: </strong>Syftet med denna uppsats är att undersöka hur moderbolagets aktiekurs reagerar, därmed påvisa eventuell onormal avkastning när ett moderbolag beslutar sig för och sedan avyttrar en del av ett dotterbolag till börsen (Equity Carve‐Out). Delsyftet är att undersöka sambandet mellan onormalavkastning i storleken på avyttrade andelar samt beskriva de motiv som anges och analysera detta mot storleken på avknoppad andel.</p><p><strong>Metod: </strong>Undersökningen är en eventstudie med en kvantitativ ansats. Empirin består av sekundärdata i form av börskurser och index.</p><p><strong>Teori: </strong>Eventstudien bygger på hypotesen om effektiva marknader, teorin om asymmetrisk information, agent teori samt teorin om avknoppningsfördelar.</p><p><strong>Empiri: </strong>Eventstudien bygger på 25 Equity Carve‐Outs genomförda mellan åren 1991‐2007 och behandlar aktieutvecklingen dels vid beslut och dels vid genomförandet av en avknoppning, detta relateras sedan till tidigare forskning.</p><p><strong>Resultat </strong></p><ul><li>ECO mellan åren 1991 och 2007 har generellt medfört svagt positiva priseffekter vid beslutet om avknoppning och positiva priseffekter vid avyttringen. </li><li>En ECO motsäger sig inte den effektiva marknadshypotesen i dess halvstarka form. </li><li>Det finns inget samband i marknadsreaktionen beroende på storleken i avyttrad andel. </li><li>Angivna motiv skiljer sig generellt inte beroende på hur stor andel som avyttras. </li></ul> / <p><strong>Purpose: </strong>The aim of this bachelor thesis paper is to investigate parent company stock market reactions to decision and sale of a subsidiary through an Equity Carve‐Out. A secondary purpose is to investigate the correlation between the abnormal returns and the amount of stocks sold in a subsidiary and describe the motives associated whit the sale, and relate those motives to the amount of stocks sold in the subsidiary.</p><p><strong>Methodology: </strong>An event study with a quantitative approach based on empirics consisting of abnormal returns, calculated based on the adjusted market model.</p><p><strong>Theoretical perspectives: </strong>This study is based on the efficient market hypothesis, asymmetric information hypothesis, agency theory and divestiture gains hypothesis.</p><p><strong>Empirical foundation: </strong>The study is based on 25 Equity Carve‐Outs during the period 1991‐2007 on the Swedish stock exchange.</p><p><strong>Conclusion </strong></p><ul type="disc"><li>Equity Carve‐Outs between 1991 and 2007 have generated slightly positive price effects at the time of decision and increasingly positive price effects at the time of the sale. </li><li>An Equity Carve‐Out does not contradict the efficient market theory. </li><li>There is no immediate correlation between the market reaction and the size in the subsidiary retained. </li><li>Parent company motives do not differ depending on the size in the subsidiary retained. </li></ul><p> </p>

Syfte: Syftet med denna uppsats är att undersöka hur moderbolagets aktiekurs reagerar, därmed påvisa eventuell onormal avkastning när ett moderbolag beslutar sig för och sedan avyttrar en del av ett dotterbolag till börsen (Equity Carve‐Out). Delsyftet är att undersöka sambandet mellan onormalavkastning i storleken på avyttrade andelar samt beskriva de motiv som anges och analysera detta mot storleken på avknoppad andel. Metod: Undersökningen är en eventstudie med en kvantitativ ansats. Empirin består av sekundärdata i form av börskurser och index. Teori: Eventstudien bygger på hypotesen om effektiva marknader, teorin om asymmetrisk information, agent teori samt teorin om avknoppningsfördelar. Empiri: Eventstudien bygger på 25 Equity Carve‐Outs genomförda mellan åren 1991‐2007 och behandlar aktieutvecklingen dels vid beslut och dels vid genomförandet av en avknoppning, detta relateras sedan till tidigare forskning. Resultat ECO mellan åren 1991 och 2007 har generellt medfört svagt positiva priseffekter vid beslutet om avknoppning och positiva priseffekter vid avyttringen. En ECO motsäger sig inte den effektiva marknadshypotesen i dess halvstarka form. Det finns inget samband i marknadsreaktionen beroende på storleken i avyttrad andel. Angivna motiv skiljer sig generellt inte beroende på hur stor andel som avyttras. / Purpose: The aim of this bachelor thesis paper is to investigate parent company stock market reactions to decision and sale of a subsidiary through an Equity Carve‐Out. A secondary purpose is to investigate the correlation between the abnormal returns and the amount of stocks sold in a subsidiary and describe the motives associated whit the sale, and relate those motives to the amount of stocks sold in the subsidiary. Methodology: An event study with a quantitative approach based on empirics consisting of abnormal returns, calculated based on the adjusted market model. Theoretical perspectives: This study is based on the efficient market hypothesis, asymmetric information hypothesis, agency theory and divestiture gains hypothesis. Empirical foundation: The study is based on 25 Equity Carve‐Outs during the period 1991‐2007 on the Swedish stock exchange. Conclusion <ul type="disc">Equity Carve‐Outs between 1991 and 2007 have generated slightly positive price effects at the time of decision and increasingly positive price effects at the time of the sale. An Equity Carve‐Out does not contradict the efficient market theory. There is no immediate correlation between the market reaction and the size in the subsidiary retained. Parent company motives do not differ depending on the size in the subsidiary retained.

In the absence of taxes and transactions costs, there can be no benefit to corporate reorganization from a financial standpoint, but ‘real world’ limitations and frictions do provide additional value that is gained through divestitures in terms of focus and financial flexibility. Herein, the corporate divestiture decision is analyzed to determine the motivation for a parent company either to cleave its offspring directly to the external capital market in an equity carve-out or to distribute the shares to the existing shareholders in a tax-free spin-off. Cash flow performance, asymmetric information, relative size of the divestiture, and relatedness of the parent’s and subsidiary’s operations are all found to contribute significantly to the divestiture decision. In Canada, an alternate form of security, known as the income trust unit, has become popular for corporate reorganizations, either through an initial public offering or as a conversion of shares. The flow-through structure of income trusts currently allows avoidance of corporate taxation to offer higher pre-tax returns to retail investors, in a market setting where yield is increasingly equated with value. To determine placement of these securities in the market, the risk of the income trust organizational form is analyzed and compared to the standard corporate form. Further, a number of publicly known characteristics of the income trusts can predict the relative risk of this type of investment. In recent ‘hot markets’ for these securities, proof is uncovered that unsuitable firms have been migrating to this sector, but valuation of the investments in this sector has remained fair and full. Although pending legislation will discontinue the tax-exempt status of income trusts in 2011, during their tenure these securities have improved the Canadian market. Based on the data analysis herein, all types of divestitures studied have been predicted to provide commensurate value with respect to risk depending on the nature of the subsidiary. / Thesis (Ph.D, Management) -- Queen's University, 2007-08-15 11:20:20.465

Background: Previous studies on the subject, contrary to corresponding studies on mergers and acquisitions, have shown significant positive market reactions from all over the world on the announcements of divestitures. However, similar studies have not been done on the Swedish market. There are split opinions on the origin of the abnormal returns from the announcements of divestitures, but the economic cycle, choice of payment method and industry affiliation are recurring explaining variables in event studies. Aim: The aim of the study is to investigate the effect on shareholder wealth from the announcements of a divestiture on the Swedish market during the period from 1997-2017, as well as investigating how the abnormal returns are affected by the economic cycle, choice of payment method and industry affiliation. Completion: The study is conducted using the event study methodology and a deductive approach. Historical time series from divesting companies share prices are used to estimate expected returns which are then compared to actual returns to decide whether the announcement of a divestiture has an impact on shareholder wealth. Results: The study finds significant results that divesting companies’ shareholder wealth are positively affected by the announcement of a divestiture for both event windows (-3, +3) and (-1, +1). For each separate day within the event window the authors find statistically significant returns for day T-2 and T0. The authors find no statistically significant differences between the returns regarding the economic cycle. Regarding the choice of method of payment, it is concluded that payment through stock generates excess returns when compared to other financing alternatives. No differences could be found between different industry affiliations. / Bakgrund: Tidigare studier inom ämnet har, till skillnad från motsvarande forskning om företagsförvärv, påvisat signifikanta positiva reaktioner från marknader över hela världen vid tillkännagivandet av en avyttring. Däremot saknas studier om avyttringars effekt på den svenska marknaden. Det råder delade meningar om varför abnormal avkastning uppstår vid tillkännagivandet, där konjunkturläge, finansieringsalternativ och branschtillhörighet är vanligt förekommande förklarande variabler i eventstudier. Syfte: Studiens syfte är att undersöka hur tillkännagivandet av en avyttring påverkar säljande bolags aktiekurs på den svenska marknaden under tidsperioden 1997–2017, samt att undersöka hur rådande konjunkturläge, valt finansieringsalternativ och branschtillhörighet påverkar avkastningen Genomförande: Studien genomförs genom eventstudiemetodologin med en deduktiv ansats. Empirin utgår från historisk tidsseriedata från avyttrande bolags aktiekurser för att bestämma förväntad avkastning som sedan jämförs med faktiskt avkastning för att urskilja om tillkännagivandet påverkar kursutvecklingen. Resultat: Studien visar statistiskt signifikanta resultat för att avyttrande bolags aktiekurs påverkas positivt av tillkännagivandet av en avyttring både för eventfönstret (-3, +3) och (-1, +1). För de enskilda dagarna i eventfönstret finner författarna statistiskt signifikanta avkastningar för dag T-2 och T0. Författarna finner inga statistiskt säkerställda skillnader i avkastning beroende på rådande konjunkturläge. Gällande val av finansieringsalternativ visas att betalning genom aktier genererar signifikant högre avkastning än övriga alternativ. Inga samband kunde säkerställas beroende på företagens branschtillhörighet.

This thesis consists of four self-contained essays. The common theme of the essays is the behavior of multi-plant firms. An underlying idea in all four of them is that firms possess intangible assets such as management skills and organizational expertise, technological knowledge, marketing know-how and better access to finance capital or natural resources. These assets are typically specific to the respective firm. Due to market imperfections and failures, firms tend to internalize the advantages of firm-specific assets and exploit them themselves rather than sell or lease them to other firms. For instance, intangible assets are often joint inputs in the sense that knowledge developed by one unit can be transferred to another unit within the same firm at a low cost and without diminishing the amount of knowledge available to the first unit. Furthermore, the assets are typically only partly appropriable by their owner, and the market transactions of the assets are hampered due to information asymmetries between a potential buyer and seller. The literature on multinational firms emphasizes the role of intangible firm-specific assets in creating ownership advantages that, together with location and internalization advantages, explain the pattern of foreign direct investments. The essays in this thesis are based on the view that the ownership advantages created by firm-specific assets are the "raison d'etre" of large multi-plant firms. The existence of such assets is assumed to create multi-plant economies of scale and give incentives to make better use of capacity or overheads to gain advantage in size, economies of interdependent activities, integration and/or diversification. Rather than studying the international aspects of firms with intangible assets, the first three essays empirically explore different aspects of multi-plant firm behavior in domestic markets. This analysis has been made possible by the access to unique plant-level data on the thirty largest multinational manufacturing corporations in Sweden. The sample corporations play an important role in the Swedish economy. For instance, the thirty corporations account for about 70 percent of aggregate industrial R&amp;D in 1999. This should be compared with their share of total manufacturing employment, which was about 30 percent during the period of study. The first essay examines the sources of productivity growth within multi-plant firms and particularly emphasizes the role of external restructuring and ownership changes in explaining why multi-plant firms may sustain higher productivity growth as compared to single-plant firms. The second and the third essay explore the idea that large multi-plant corporations exploit their ownership advantages when acquiring partial- and full-firm assets. The second essay analyzes whether technological intangible assets may explain transfers of productive capacity from acquiring corporations to their target. The third essay explores the idea that multi-plant corporations search for targets matching their firm-specific organizational capabilities when acquiring corporate assets. Uncertainty about the matching outcome explains why some acquisitions end in divestitures. However, the likelihood of a "good" match is expected to increase in the buyer's organizational capabilities. The fourth essay, coauthored with Karolina Ekholm, extends the analysis to encompass the international aspects of multinational firms. In this essay, we develop a theoretical model analyzing the localization decisions of multi-plant firms beyond the national borders. More specifically, we develop a two-country model where firms can choose to separate their innovative activities generating an intangible asset from the production of the final good. In our model, there are two agglomeration forces: knowledge spillovers associated with R&amp;D and backward and forward linkages associated with high-tech production. We analyze how the interplay of these forces affects the localization decisions of the firms. / Diss. Stockholm : Handelshögsk., 2003

This research has investigated the long-run performance of corporate restructurings through unbundling transactions on the JSE between 2000 and 2012. The corporate unbundling transactions considered by the research are spin-offs and sell-offs. From the two unbundling transactions, four samples were derived, that is, 21 spin-offs, 14 parent-spin-offs, 14 sell-offs and 20 parent-sell-offs. The share price performance of these samples was investigated by a matching firm methodology under the buy and hold abnormal returns. The research found that positive abnormal returns are present for both samples for up to four years after unbundling. Secondly, with the exception of parent-sell-offs, significant abnormal returns were experienced by both samples for up to four years after unbundling. It was also found that a spin-off is a preferable corporate unbundling strategy to a sell-off over a long-run period. This research implies that companies with heavy structures should unbundle in order to unlock shareholders’ value. / Business Management / M. Com. (Business Management)