TY - JOUR
T1 - Value creation from financing in equity carve-outs
T2 - Evidence from Japan
AU - Otsubo, Minoru
N1 - Funding Information:
I thank an anonymous referee for helpful comments. This work is supported by KAKENHI (90325556). I am grateful for this financial support.
PY - 2013/7
Y1 - 2013/7
N2 - This study examines whether and how Japanese carve-outs enhance the wealth of their parent companies' shareholders. In considering the differences between U.S. and Japanese carve-outs, this paper focuses on financing opportunities in carve-outs and tests the parent financing hypothesis and the subsidiary financing hypothesis.Through empirical analysis, this paper finds that the stock of a parent company reacts positively to a carve-out, and it especially reacts positively when the parent company is highly leveraged. In addition, parent companies apparently use funds from carve-outs to lower their leverage and continue to lower their leverage after carve-outs. Thus, the stock market may regard carve-outs as a trigger to reduce a parent company's leverage.
AB - This study examines whether and how Japanese carve-outs enhance the wealth of their parent companies' shareholders. In considering the differences between U.S. and Japanese carve-outs, this paper focuses on financing opportunities in carve-outs and tests the parent financing hypothesis and the subsidiary financing hypothesis.Through empirical analysis, this paper finds that the stock of a parent company reacts positively to a carve-out, and it especially reacts positively when the parent company is highly leveraged. In addition, parent companies apparently use funds from carve-outs to lower their leverage and continue to lower their leverage after carve-outs. Thus, the stock market may regard carve-outs as a trigger to reduce a parent company's leverage.
UR - http://www.scopus.com/inward/record.url?scp=84876849746&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84876849746&partnerID=8YFLogxK
U2 - 10.1016/j.jeconbus.2013.03.002
DO - 10.1016/j.jeconbus.2013.03.002
M3 - Article
AN - SCOPUS:84876849746
SN - 0148-6195
VL - 68
SP - 52
EP - 69
JO - Journal of Economics and Business
JF - Journal of Economics and Business
ER -