Corporate governance and market performance of parent firms following equity carve-out announcements |
| |
Authors: | Salim Chahine Mohamad Jamal Zeidan |
| |
Affiliation: | 1. Department of Finance, The Olayan School of Business, American University of Beirut, Bliss Street, Beirut, Lebanon 2. Department of Management, The Olayan School of Business, American University of Beirut, Bliss Street, Beirut, Lebanon
|
| |
Abstract: | Using the Gompers, Ishii, and Metrick corporate governance index on a sample of 158 parent firms, this study demonstrates that firms with a superior governance rating have a higher short-term market reaction to carve-out announcements relative to firms with an inferior governance rating. Although the data supports previous evidence regarding negative long-term market reaction that parent firms typically experience following equity carve-outs, the results show that well-governed firms marginally outperform others. The findings also confirm that the dynamic effects related to improvements in corporate governance positively affect the long-term market outcome of parent firms; this relation is more significant in well-governed parent firms. Finally, the study shows evidence that corporate governance helps mitigate the agency problems related to the financing hypothesis, which results in better short and long-term market reactions following carve-out announcements. |
| |
Keywords: | |
本文献已被 SpringerLink 等数据库收录! |
|