Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments May 10, 1999 erstellt
Beschreibung:
Equity carve-outs appear to accurately correlate with the peak in an overvalued stock market. We base this conclusion of market timing on four findings in a sample of 265 carve-outs undertaken by publicly traded parents between 1981 and 1995. First, the mean return on the value-weighted NYSE, AMEX and NASDAQ market over the year before the carve-out is substantially above the unconditional expected return on the market. Second, this same pre-carve-out mean market return is substantially greater than the mean return on the market over the year after the carve-out. Third, maximum likelihood estimation indicates that the return on the market drops 16 days prior to when the carved-out subsidiary stock is issued. Fourth, carve-outs are contrarian predictors of future one-year market-wide returns, even after controlling for rational determinants of future market returns