Year: 2008
Author: Elsas, Ralf, Löffler, Yvonne
Credit and Capital Markets – Kredit und Kapital, Vol. 41 (2008), Iss. 4 : pp. 557–587
Abstract
Universal Banks, Corporate Control, and Equity Carve-Outs in Germany
This paper analyzes value effects of changes in the governance structure of German firms due to equity carve-outs.
Our main conjecture is that the degree of pre-event corporate control affects market reactions to the announcement of carve-outs. We test two contradictory implications. If less control of management leads to less efficiently managed firms, in particular these firms will benefit the most from a change in the governance structure. On the other hand, if tight control of management ensures a more efficient use of the carve-out proceeds, firms more subject to corporate control will have higher abnormal returns.
Our evidence clearly supports the first prediction. We find that a higher degree of pre-event ownership concentration leads to lower abnormal returns. We find evidence consistent with an active role of banks in disciplining management, but this does not go beyond what non-financial blockholders achieve, although we explicitly take into account direct equity stakes, proxy-voting rights, and supervisory board representation of banks. (JEL G21, G32)
Journal Article Details
Publisher Name: Global Science Press
Language: English
DOI: https://doi.org/10.3790/kuk.41.4.557
Credit and Capital Markets – Kredit und Kapital, Vol. 41 (2008), Iss. 4 : pp. 557–587
Published online: 2008-12
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 31
Author Details
-
Determinanten der Vorstandsvergütung
Rapp, Marc Steffen | Wolff, MichaelZeitschrift für Betriebswirtschaft, Vol. 80 (2010), Iss. 10 P.1075
https://doi.org/10.1007/s11573-010-0395-x [Citations: 28] -
The valuation effects of equity carve-outs
Sun, Meijui | Shu, Pei-GiApplied Economics Letters, Vol. 18 (2011), Iss. 9 P.887
https://doi.org/10.1080/13504851.2010.515196 [Citations: 2] -
New evidence on value creation through hedge fund activism: A qualitative comparative analysis
Ben Arfa, Nouha | Ammari, Aymen | Boussaada, RimStrategic Change, Vol. 29 (2020), Iss. 6 P.681
https://doi.org/10.1002/jsc.2373 [Citations: 0]