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Long-term returns from equity carveouts

Article Abstract:

A study was conducted to compare the performance of equity carveouts with initial public offerings (IPOs) and seasoned equity offerings (SEOs). Using a sample of 682 carveouts between 1981 and 1995, the study found the performance of newly issued subsidiary stocks to be within the range of appropriate benchmarks three years after the carveout. This contrasts with the documented poor performance of IPOs and SEOs. The superior performance of equity carveouts is attributed to the sharper business focus of both subsidiary and the parent after the carveout.

Divestiture Analysis, Management, Finance, Corporate finance, Corporate divestiture, Divestiture

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Underwriting calls of convertible securities: a note

Article Abstract:

Stock price reaction toconvertible preferred stock calls is negative when conversion is coursed through underwriters. In contrast, a much smaller statistically insignificant decline is recorded for non-underwriter calls. Thus, the price behavior of stocks is apparently not dependent on the type of security being converted. Theresults further indicate that managers use underwriting firms for conversion calls when the information they possess about firm value is particularly unfavorable.

Security brokers and dealers, Banking industry, Services, Prices and rates, Stocks, Stock prices, Convertible bonds, Convertible preferred stocks

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Layoffs and underwritten rights offers

Article Abstract:

The vast majority of corporations in the US favor general public offerings despite the less expensive direct costs of rights offers. This may be partly because of the offering-period price decrease and the nature of restrictions facing underwriters. It was shown that underwriters find a market in standby underwritten rights and are vigorous mediators during the rights offering duration.

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