Determinants and consequences of equity restructuring transactions: How are tracking stocks different from equity carve-outs and spin-offs?

摘要

This dissertation examines the determinants and consequences of management's decision to create a new common stock through an equity restructuring. Equity restructuring types include equity carve-outs, spin-offs, and the issuance of tracking stocks. I find that the key determinant of equity restructurings is market timing; that management undertakes these transactions to capture valuation rents in industries with high relative valuations. I also find that the new stocks created by these restructurings exhibit different risk-return characteristics from the original firm, but no evidence that they attract a new investor clientele. I find some evidence that these equity restructurings reduce information asymmetries between management and investors, as well as among investors, on the business underlying the new stock.; I then examine the choice between the various restructuring options. I find that equity restructurings are more likely to be tracking stock issuances if (i) the underlying division generates tax benefits and (ii) the division has interdependencies with the parent division and has or produces more specific assets. I find mixed evidence on the association between managerial entrenchment and the likelihood of tracking stock issuance.