A COMPARISON OF THE INFORMATION CONVEYED BY EQUITY CARVE-OUTS, SPIN-OFFS, AND ASSET SELL-OFFS

We examine valuation effects on firms in the same industry as entities that are the subject of carve-outs (initial public offerings of subsi diary equity), spin-offs, and asset sell-offs. Share price reactions f or rivals are negative in response to equity carve-outs. In comparison , rival stock returns are positive for spin-offs and normal for asset sell-offs, restructuring actions that do not entail a public offering of equity. Our results suggest managers conduct equity carve-outs when outside investors are likely to price the new shares higher than mana gers' perceived value.