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The Journal of Portfolio Management

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The Stock Price Performance of Spin-Off Subsidiaries, Their Parents, and the Spin-Off ETF, 2001–2013

John J. McConnell, Steven E. Sibley and Wei Xu
The Journal of Portfolio Management Fall 2015, 42 (1) 143-152; DOI: https://doi.org/10.3905/jpm.2015.42.1.143
John J. McConnell
is a professor of finance in the Krannert School of Management at Purdue University in West Lafayette, IN.
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  • For correspondence: mcconnj@purdue.edu
Steven E. Sibley
is a professor of finance in the Krannert School of Management at Purdue University in West Lafayette, IN.
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  • For correspondence: ssibley@purdue.edu
Wei Xu
is an assistant professor at HSBC Business School, Peking University in Shenzhen, China.
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  • For correspondence: weixu@phbs.pku.edu.cn
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Abstract

This article documents the stock price performance of subsidiaries spun off by their corporate parents and of the parents that spun them off from 2001 to 2013. In doing so, it updates earlier studies that report excess returns for both parents and subsidiaries. The authors find that subsidiaries substantially outperformed reasonable benchmarks; parents did so as well, but by a much smaller margin. Further, a portfolio that buys all subsidiaries outperformed the Spin-Off Exchange-traded Fund, which itself outperformed the value-weighted market index. Spun-off subsidiaries and their parents have achieved superior returns over the most recent 13 years, as well as with superior returns over the previous 35 years, as documented by prior studies.

TOPICS: Exchange-traded funds and applications, portfolio management/multi-asset allocation

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The Journal of Portfolio Management: 42 (1)
The Journal of Portfolio Management
Vol. 42, Issue 1
Fall 2015
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The Stock Price Performance of Spin-Off Subsidiaries, Their Parents, and the Spin-Off ETF, 2001–2013
John J. McConnell, Steven E. Sibley, Wei Xu
The Journal of Portfolio Management Oct 2015, 42 (1) 143-152; DOI: 10.3905/jpm.2015.42.1.143

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The Stock Price Performance of Spin-Off Subsidiaries, Their Parents, and the Spin-Off ETF, 2001–2013
John J. McConnell, Steven E. Sibley, Wei Xu
The Journal of Portfolio Management Oct 2015, 42 (1) 143-152; DOI: 10.3905/jpm.2015.42.1.143
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  • Article
    • Abstract
    • Some Anecdotes
    • THE SAMPLE OF SPIN-OFFS
    • MEASURING PERFORMANCE
    • SUBSIDIARY PERFORMANCE
    • PARENT PERFORMANCE
    • ETF PERFORMANCE
    • CONCLUSION
    • ENDNOTES
    • References
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  • PDF (Subscribers Only)

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