Line-of-Business Disclosures and Spin-Off Announcement Returns

Line-of-Business Disclosures and Spin-Off Announcement Returns We investigated disclosure decisions by identifying a circumstance, the spin-off of a segment, where the benefits of disclosure should outweigh the costs. We compared the valuation revisions associated with spin-off announcements of firms with previous line of business disclosures to valuation revisions of firms making spin-off announcements without these disclosures. We found significant stock price increases associated with the spin-off announcement regardless of prior segment disclosure history. We also found, however, that the stock price increases were temporary for firms without prior segment disclosures, while the valuation revisions for firms with previous line-of-business disclosure information persisted. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

Line-of-Business Disclosures and Spin-Off Announcement Returns

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2005 by Springer Science + Business Media, Inc.
Subject
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
ISSN
0924-865X
eISSN
1573-7179
D.O.I.
10.1007/s11156-005-6867-3
Publisher site
See Article on Publisher Site

Abstract

We investigated disclosure decisions by identifying a circumstance, the spin-off of a segment, where the benefits of disclosure should outweigh the costs. We compared the valuation revisions associated with spin-off announcements of firms with previous line of business disclosures to valuation revisions of firms making spin-off announcements without these disclosures. We found significant stock price increases associated with the spin-off announcement regardless of prior segment disclosure history. We also found, however, that the stock price increases were temporary for firms without prior segment disclosures, while the valuation revisions for firms with previous line-of-business disclosure information persisted.

Journal

Review of Quantitative Finance and AccountingSpringer Journals

Published: Jan 1, 2005

References

  • Disclosure Level and the Cost of Equity Capital
    Botosan, C.
  • Corporate Focus and Value Creation: Evidence from Spinoffs
    Daley, L.; Mehrotra, V.; Sivakumar, R.
  • Does the Stock Market Overreact?
    DeBont, W.; Thaler, R.
  • Further Evidence on Investor Overreaction and Stock Market Seasonality
    DeBont, W.; Thaler, R.

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