Value creation through spin-offs: Swedish evidence between 2010-2018

Abstract: International studies have reported significant excess returns in conjunction with announcements of spin-offs. However, there is to some extent a lack of professional research on stock market reactions of spin-offs in Sweden. This study aims to investigate whether spin-offs in Sweden after the 2008 global financial crisis create shareholder value. The research is conducted using an event study investigating a sample of 22 spun-off and parent firms. The findings suggest the abnormal returns are lower the 100 trading days after the spin-off compared to the 100 trading days prior to it at 5% significance. However, we can show that the spin-offs exhibit positive abnormal returns over the full 200-day window at 10% significance. Results indicate that the abnormal returns are mainly occur within the 100 trading days prior to the spin-off date, where abnormal returns are positive at 1% significance. We speculate whether abnormal returns connected to the spin-offs might be shifted in time to before the actual spin-off date.