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The Spinoff and Merger Ex‐Date Effects

The Spinoff and Merger Ex‐Date Effects ABSTRACT This article shows that some of the wealth gains from financial decisions involving changes in security form occur on predictable ex dates. For a sample of 113 spinoffs during 1964 to 90, we document an average excess return of 3.0 percent on ex dates, roughly the same magnitude as the average announcement‐date return. We conjecture that the spinoff ex‐date return arises because the parent and subsidiary stocks attract different investors who prefer to buy the separated shares after the ex date. We also document that, on average, the target shareholders in stock‐for‐stock mergers earn an excess return of 1.5 percent on merger ex dates. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Finance Wiley

The Spinoff and Merger Ex‐Date Effects

VIJH, ANAND M.
The Journal of Finance , Volume 49 (2) – Jun 1, 1994
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References (25)

Publisher
Wiley
Copyright
1994 The American Finance Association
ISSN
0022-1082
eISSN
1540-6261
DOI
10.1111/j.1540-6261.1994.tb05153.x
Publisher site
See Article on Publisher Site

Abstract

ABSTRACT This article shows that some of the wealth gains from financial decisions involving changes in security form occur on predictable ex dates. For a sample of 113 spinoffs during 1964 to 90, we document an average excess return of 3.0 percent on ex dates, roughly the same magnitude as the average announcement‐date return. We conjecture that the spinoff ex‐date return arises because the parent and subsidiary stocks attract different investors who prefer to buy the separated shares after the ex date. We also document that, on average, the target shareholders in stock‐for‐stock mergers earn an excess return of 1.5 percent on merger ex dates.

Journal

The Journal of Finance – Wiley

Published: Jun 1, 1994

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