Asian Review of Financial Research Vol.18 No.2 pp.139-183
Determinants of the Performance through Spin-offs
Key Words : 분리설립,기업분리,사업집중화,정보비대칭 완화,확증이득
In this study, we investigated the market and operating performances and their determinants of spin-offs for Korean firms. Firms generally increase focus by spinning off unrelated business. Thus, it is expected that spin-offs have a significantly positive influence on the performance of spin-offs parents.The first of our main results was that spin-offs had significantly positive short-term and long-term abnormal returns. Also, we found a significant improvement in operating performance in the year after spinning off. Second, it was found that corporate focus increased significantly and the level of information asymmetry decreased insignificantly after the completion of spin-offs. The results support the focusing hypothesis rather than information asymmetry hypothesis for the spin-off. Third, there was a positive relationship between focus increase and both of market and operating performances. That is, the performance of focus-increasing spin-offs outperformed non-focus-increasing spin-offs. Thus, this result also confirms the focusing hypothesis. In addition, the evidence on capital-raising activities and cross-sectional regression also support the focusing hypothesis.