Equity carve-outs, efficiency gains, and market timing [Elektronische Ressource] / vorgelegt von Matthias Florianus Paul Baltin

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Sujets

• Management

Informations

• Publié par: rheinisch-westfalischen_technischen_hochschule_-rwth-_aachen
• Publié le: 01 janvier 2007
• Nombre de lectures: 10
• Langue: English
• Poids de l'ouvrage: 2 Mo

Extrait

Equity Carve-Outs, Efficiency Gains,
and Market Timing



Von der Fakultät für Wirtschaftswissenschaften der
Rheinisch-Westfälischen Technischen Hochschule Aachen
zur Erlangung des akademischen Grades eines Doktors der
Wirtschafts- und Sozialwissenschaften genehmigte Dissertation

vorgelegt von
Dipl.-Kfm. Matthias Florianus Paul Baltin
aus Gifhorn




Berichter: Univ.-Prof. Dr.rer.pol.habil. Malte Brettel
Univ.-Prof. Dr.rer.pol. Wolfgang Breuer

Tag der mündlichen Prüfung: 23.08.2007

Diese Dissertation ist auf den Internetseiten der Hochschulbibliothek online verfügbar.
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FOREWORD
As instruments of financing and restructuring, equity carve-outs (ECOs) continue to attract
significant interest among corporate practitioners. This observation holds despite the low
number of ECOs during the 2002/2003 period, which can be put down to the overall climate
on capital markets rather than to the nature of ECOs. In parallel to the activities in the
corporate sector, academia has discovered ECOs as intriguing subjects for its studies.
Although researchers have turned to these transactions for some twenty years now, there is
not yet full agreement on the results of these studies. On the one hand, researchers have
detected a positive short-term effect, which is consistent across different studies and
countries, whereas on the other hand it was unclear if this effect is durable in the long-run.
Based on this lack of agreement on the long-term effects, a study around how ECOs affect
company value is promising. To this, the dual character of ECOs as instruments of financing
and restructuring adds a dimension of practical relevance. Taken together, this explains the
strong attention that ECOs continue to attract. What is more, requisite data for the study of
ECOs has become more and better in the recent past: The relevant databases now contain a
large and growing body of statistical information that opens a range of possibilities to
researchers.
Matthias Baltin has taken these developments as a reason to study 174 US ECOs, thereby
building on prior work at the chair for Wirtschaftswissenschaften für Ingenieure und
Naturwissenschaftler at RWTH Aachen. He articulates his objective as follows: “There has
been some consensus, both in academic literature and among practitioners, that an ECO tends
to create economic value. The present study aims to reevaluate this assertion from a
theoretical and an empirical perspective.”
Matthias Baltin meets this objective in impressive fashion. Applying a theoretically founded
approach to this practically relevant topic, he derives interesting insight through his empirical
research. By combining these two dimensions, his work goes beyond the contributions by
earlier articles. Yet this combination of the theoretical and the empirical is not the only
distinctive mark of the present work. The analyses it contains equally stand out: For example,
Matthias Baltin discusses the market timing of ECOs – a point which will certainly be
recognized by future research.
With this and its numerous other highly insightful results, the present work by Matthias Baltin
is a remarkable contribution, not only for researchers but also for managers and other
practitioners. For example, executives can build on the present work to derive information
about the suitable timing of an ECO. For all it has offer, I wish this work the broad audience
that it clearly deserves.
Malte Brettel
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ACKNOWLEDGEMENTS
Writing a doctoral dissertation is like peeling an onion: There will always be a deeper layer of
questions. I count myself fortunate to be surrounded by individuals who have provided
support and perspective throughout my doctoral endeavor. They have taught my how to peel
an onion, how not to get lost in its layers, and – most importantly – that an onion is still only
an onion. For this, I would like to say thank you.
My sincere thanks go to Professor Malte Brettel, the supervisor of my doctoral studies, whose
advice and support have been fundamental. I would also like to thank Professor Wolfgang
Breuer. As advisor on this study, he has been an integral part of its success. I am further
indebted to my doctoral colleagues at the chair of Professor Brettel at the University of
Aachen, and in particular to Dr. Lukas Junker, for their comments and criticisms. I would also
like to thank Dr. Degenhard Meier, Razvan Creanga, Professor John McConnell, and
Professor Anand Vijh for help in gaining access to data.
This work would not have been without the backing of my family. My parents and brother
have supported my studies with the wonderful irrational exuberance that sets apart the best of
families. Thank you forever.
Matthias Baltin

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SECTION OVERVIEW

1 Introduction........................................................................................................................ 1
2 Sample attributes.............................................................................................................. 21
3 Theoretical framework ..................................................................................................... 39
4 Short-term ECO performance .......................................................................................... 63
5 Long-term ECO performance......................................................................................... 105
6 Efficiency effects............................................................................................................ 151
7 Market timing................................................................................................................. 229
8 Market condition............................................................................................................283
9 Geographic concurrence................................................................................................. 315
10 Conclusions and implications ........................................................................................ 349

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TABLE OF CONTENTS
1 Introduction ...................................................................................................................... 1
1.1 A study of equity carve-outs ...................................................................................... 1
1.1.1 Problem statement and overall approach ........................................................... 1
1.1.2 Relevance...........................................................................................................2
1.1.2.1 Economic relevance ....................................................................................... 2
1.1.2.2 Academic relevance........................................................................................ 3
1.1.3 Section outline....................................................................................................3
1.2 Definitions.................................................................................................................. 4
1.2.1 Equity carve-out.................................................................................................4
1.2.2 Delineations........................................................................................................4
1.3 ECO characteristics6
1.3.1 The financing aspects of an ECO....................................................................... 6
1.3.1.1 ECOs in the pecking order............................................................................. 7
1.3.1.2 Primary versus secondary placements........................................................... 7
1.3.2 The restructuring aspects of an ECO.................................................................. 8
1.4 Existing research on ECOs....................................................................................... 10
1.4.1 Short-term ECO performance .......................................................................... 10
1.4.2 Long-term ECO performance........................................................................... 11
1.4.3 Determinants of ECO performance 12
1.4.3.1 Signaling effects ........................................................................................... 12
1.4.3.2 Efficiency effects 14
1.4.4 Other ECO research ......................................................................................... 15
1.5 Objectives and scope................................................................................................ 16
1.5.1 Objectives of the study..................................................................................... 16
1.5.2 Scope and limitations ....................................................................................... 18
1.6 Document structure..................................................................................................20
2 Sample attributes............................................................................................................ 21
2.1 Section introduction.................................................................................................21
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2.1.1 Descriptive exposition...................