Motivation and performance of spin offs

Abstract: In this paper we analyse share performance at announcement and in the years following execution, for a sample of 92 parent firms and 103 spun off entities, from 2000 to 2017. We find significant announcement effects, as well as evidence supporting long run outperformance of both the parent and spun off entities. Additionally, we study the effects of various factors on the share performance, including changes in the macroeconomic environment and differences for "focus increasing" spin offs. This delivers some interesting results that motivate further research, but don't confirm these theories as is.