He also wishes to thank an anonymous referee and the editor Andrew Stark, whose suggestions have considerably improved the paper. Any errors remain the author's own. Support from the UCD Research Fund is also gratefully acknowledged.
Spin-offs in an Environment of Bank Debt
Article first published online: 18 APR 2008
© 2008 The Author Journal compilation © 2008 Blackwell Publishing Ltd
Journal of Business Finance & Accounting
Volume 35, Issue 3-4, pages 406–433, April/May 2008
How to Cite
Murray, L. (2008), Spin-offs in an Environment of Bank Debt. Journal of Business Finance & Accounting, 35: 406–433. doi: 10.1111/j.1468-5957.2008.02088.x
- Issue published online: 18 APR 2008
- Article first published online: 18 APR 2008
- (Paper received May 2007, revised version accepted January 2008. Online publication April 2008)
- bank debt;
- wealth transfer
Abstract: An assessment of the wealth impact of spin-offs involving UK firms is of interest, as they tend to access debt through banks rather than capital markets. Banks will have a different relationship with shareholders, so the distribution of returns may differ from that previously observed. The short and long-term impact on both parent and spin-off shareholders is investigated. Possible reasons for a positive returns response, including an anticipated acquisition premium, and management focus related gains, are considered. Annual financial ratios offer a further evaluation of operating performance and assess the impact on levels of leverage in parents and spin-offs.