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Do Spinoffs Create Value in Hong Kong?

Terence Tai‐Leung Chong (The Chinese University of Hong Kong)
Daniel Wai‐Hong Wong (The Chinese University of Hong Kong)
Venus Khim‐Sen Liew (Universiti Malaysia Sarawak)

Journal of Asia Business Studies

ISSN: 1558-7894

Article publication date: 16 October 2009

Abstract

There is a broad consensus in the literature that spinoffs tend to create value for shareholders and exhibit positive long‐run excess returns. However, most of the prior studies are confined to the US and the European cases. The spinoff problems in Hong Kong are surprisingly under‐studied despite its important role as a global center of capital formation. In this paper, we find that there is a short‐run value creation for the Hong Kong spinoffs. However, the financial health of the spinoff companies, measured by various financial ratios, tends to deteriorate in the long‐run. In general, Hong Kong spinoffs generate negative returns to investors.

Keywords

Citation

Tai‐Leung Chong, T., Wai‐Hong Wong, D. and Khim‐Sen Liew, V. (2009), "Do Spinoffs Create Value in Hong Kong?", Journal of Asia Business Studies, Vol. 4 No. 1, pp. 23-32. https://doi.org/10.1108/15587890980000416

Publisher

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Emerald Group Publishing Limited

Copyright © 2009, Emerald Group Publishing Limited