We investigate whether operating performance improves when a firm creates traded equity claims on a subsidiary without relinquishing control. We find that the change in a parent firm's operating performance following an equity carve-out is negatively related to the fraction of subsidiary shares...

This paper is a cross-sectional analysis of the relationship between common stock price reactions to announcements of convertible security calls and variables that represent possible determinants of changes in common stockholders' wealth. The variables are measures of the following effects of...

We investigate the real effects of decisions to undertake an initial public offering of stock in periods of favorable investor sentiment. Specifically, we examine potential effects of favorable investor sentiment on investment expenditures and how effects on investment affect firm operating...

The two main theories of capital structure — the tradeoff theory and the pecking order theory — have opposite predictions about the expected relationship between corporate leverage and profitability. According to the tradeoff theory, companies that earn higher profits will use more debt both...

We investigate the real effects of decisions to undertake an initial public offering of stock in periods of favorable investor sentiment. Specifically, we examine potential effects of favorable investor sentiment on investment expenditures and how effects on investment affect firm operating...

Conservative financial policies are often criticized as serving the interests of managers rather than the interests of stockholders. We examine the operating performance and other characteristics of firms that for a five-year period held more than one-fourth of their assets in cash and cash...

We examine companies that issue tracking stock or undertake a minority carve-out. These restructurings create equity claims on a business unit yet the parent retains control. Although the average announcement stock price effect is approximately 3%, our evidence implies that these equity...