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Information asymmetry, valuation, and the corporate spin-off decision

Article Abstract:

The theory that the spin-off of corporate divisions increases value because it lessens information asymmetry on a firm's cash flows and operating efficiency is examined. Firms that are considered undervalued experience higher market valuation when they are sold as spin-offs. Firms which have significant growth opportunities and those which require capital are those which are inclined to conduct spin-offs. These findings do not sustain conjectures that spin-offs are conducted to lessen regulation constraints and to take advantage of mergers.

Valuation, Corporate divestiture, Divestiture

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An empirical examination of the amortized spread

Article Abstract:

An analysis of amortized spread was undertaken through the use of data involving Amex and NYSE stocks' amortized spread from 1983 to 1992. The data showed that forecasting a stock's amortized spread, which is used to determine the value of spread over the holding periods of investors, cannot be effectively carried out by depending solely on its spread. Such conclusion is based on a finding showing a variation in share turnover of stocks with identical spreads.

Securities Exchanges, Exchanges, Securities, Amortization

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Firm-specific information and the correlation between individual stocks and bonds

Article Abstract:

The correlations between a particular firm's stock returns and bond yields and how they are affected by asset-related information on the issuing firm is examined. It is argued that information on value of a specific firm's assets tends to initially affect its stock prices before subsequently affecting its bond yields. It was conluded that is the stock market the lead provider of firm-specific information.

Securities & Commodities Exchanges, Stock-exchange, Stock exchanges, Bonds, Bonds (Securities)

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