Do spin-offs create shareholder value? The Nordic context

Sammanfattning

This thesis investigates the magnitude- and determinant factors of the short-term abnormal returns upon announcing voluntary corporate spin-offs. The sample consists of 88 completed Nordic spin-off transactions, announced between 2001 and 2021. The sources of the abnormal returns considered are (1) increased business focus, (2) relative size of the spin-off and (3) level of information asymmetry. An event study is conducted, revealing a positive and significant 3-day abnormal return for the full sample of 3.11%. Moreover, we find significant abnormal returns in the month before the formal announcement, which suggests information leakages. The results also show significantly larger positive wealth effects for focus-increasing and large spin-offs, while no evidence supports decreased information asymmetry as a determinant factor of the abnormal returns. A cross-sectional regression confirms the positive wealth effects associated with the relative size of the spin-off but weakens the explanatory value of the business focus variable.