Abstract
A parent company occasionally spin-off a subsidiary or a business unit if this helps to focus on the core business, eliminate a poor performer or reduce negative synergies in order to improve operational efficiency. Achieving a more efficient valuation on the capital market can also be a motive for a spin-off. The assumption is thus that spin-offs increase shareholder wealth. Despite the high relevance of spin-offs as a restructuring measure, empirical research has not yet sufficiently addressed this topic. The reasons for this are, on the one hand, the lack of topicality of publications and, on the other hand, the lack of consideration of the value effects of spin-offs in the European and, in particular, the German economic area. Accordingly, there is currently no adequate literature covering spin-offs in Germany. As a result, this paper addresses this problem by conducting an analysis of spin-offs in Germany. Consequently, this paper examines wealth effects for a sample of 8 spin-offs from Germany announced between January 2010 and February 2021. The cumulative average abnormal return over the three-day event window [1; +1] is 4.91%.
Highlights
For a long time, companies around the world pursued a diversification strategy (Charifzadeh, 2002: p. 1)
There is currently no adequate literature covering spin-offs in Germany. This paper addresses this problem by conducting an analysis of spin-offs in Germany
N corresponds to the sample size; Min, Max, SD and Median show the minimum, maximum, standard deviation and the median of the cumulative abnormal returns in the event window; % > 0 represents the proportion of positive cumulative abnormal returns; CAAR corresponds to the cumulative average abnormal return in the event window; t-value calculated from the One Sample t-Test; T-value calculated from the Wilcoxon-Signed-Rank-Test; *, **, and *** represent the 10%, 5%, and 1% significance levels
Summary
Companies around the world pursued a diversification strategy (Charifzadeh, 2002: p. 1). Companies around the world pursued a diversification strategy This should lead to an increase in the value of the company The prime focus was on the M&A strategy The prime focus was on the M&A strategy (Charifzadeh, 2002: p. 1)
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