Abstract
Abstract The paper took 12 groups of parent companies and subsidiaries as the samples, in which the property service companies, spun from the real estate companies, have successfully on the capital market. The research showed that the average abnormal return (AAR) of real estate companies’ stocks was positive on the first announcement date of possible spin-off listing, while the cumulative average abnormal return (CAAR) remained positive for 21 days during the (–11, 9) days around the first announcement of possible spin-off and listing. Further, the changes in operating performance of real estate companies and property service companies were analysed after the successful spin-off for 3 consecutive years, compared with the year before the spin-off and listing. The results showed that after the spin-off and listing, real estate companies and property service companies have greatly improved their performance. Therefore, the fact that real estate companies spun off property service companies created positive values for shareholders.
Highlights
As global capital markets become more closely connected and domestic companies become more familiar with asset restructuring and spin-off listing, China’s listed companies have attempted to apply the spin-off listing model to restructure their assets [17, 19, 20]
The research results showed that the abnormal return (AAR) of real estate companies’ stocks was positive on the first announcement date of possible spin-off listing and cumulative average abnormal return (CAAR) was keeping positive for 21 days during the (−11, 9) days around the first announcement of possible spin-off listing
Since the capital market possesses the function of value discovery, the realisation of the listing of the property service companies spun off from the real estate companies can contribute to the financial position of real estate companies by enabling them to obtain a positive rate of return, thereby increasing the market value of the real estate companies
Summary
As global capital markets become more closely connected and domestic companies become more familiar with asset restructuring and spin-off listing, China’s listed companies have attempted to apply the spin-off listing model to restructure their assets [17, 19, 20]. This paper analyses the changes in business performance of real estate companies and property service companies after the successful spin-off and listing, compared with the year before the spin-off and listing for three consecutive years, exploring whether spin-off and listing can effectively improve the operating performance of parent and subsidiary companies. To further study the market value of real estate companies whose listed property service companies have spun off from, the second part of this paper analysed the changes on the AAR of the stocks of real estate companies that have successfully spun off the property service companies into the capital market on and around the first announcement date by performing the event study method
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