Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments September 13, 2022 erstellt
Description:
This paper examines target following behavior of capital structure decisions in corporate spin-offs. Using this setting of large divestments, we examine if managers show target behavior, i.e., follow target capital structures, by applying two different testing strategies. In our sample of U.S. spin-offs between 1998 and 2015 we show that the results of established debt ratio-based tests could be biased by mean-reversion. After showing target behavior using such tests from the context of corporate investments, we show that target behavior can no longer be de-tected when analyzing active financing decisions, i.e., the issuance and retirement of debt and equity. We add to the literature raising serious concerns about the reliability of tests of target behavior in corporate finance