Spinoffs Impact on the Parent Company

Abstract

This study examines the impact of corporate spinoffs on the stock prices of parent companies in the short and long-term, analyzing a dataset of 99 American spinoffs from 2000 to 2020. An event study reveals significant positive abnormal returns around the event dates, indicating initial market optimism. However, longitudinal regression analysis shows that these early gains do not lead to sustained long-term benefits. The findings suggests that while spinoffs initially boost shareholder value, their long-term effects remain inconclusive. This study highlights the complexity of spinoff and their varying impacts on parent companies.