Long-term price performance of European equity carve-outs


This study analyses the abnormal long-term price performance (LTPP) of European parent and subsidiary firms involved in an equity carve-out (ECO) over the 36 months following the event. Abnormal LTPP tends to be negative on average for both parent and subsidiary firms, but assessment of significance depends on the specific methodology applied. Significance is more frequent in equal-weighted schemes, suggesting that underperformance is more pervasive in smaller firms. This result is found using a variety of methodologies and test statistics, including numerous variations of the BHAR methodology and calendar time methods.


Ordinary Little Square Abnormal Return Earning Management Share Price Weight Little Square 
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© Deutscher Universitäts-Verlag | GWV Fachverlage GmbH, Wiesbaden 2006

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