Abstract
Equity carve-outs (ECOs) have increasingly gained importance in Europe. Our study examines 52 equity carve-outs between 2005 to 2013 and evaluates their long-term performance compared to the market and comparable firms over an investment period of three years. Calculating buy-and-hold abnormal returns (BHAR) and applying the calendar-time portfolio method (CTIME), we measure a significant outperformance for the ECO sample after 12 months. Comparisons with initial public offerings, using a matched portfolio, show a significant abnormal return of 17% after 12 months. The hypothesis that ECOs show an average positive performance in the long-term finds support in our study. The superior performance of ECOs compared to IPOs remains also for longer time periods.
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