Politically linked spin-offs: evidence from Malaysia
by Nadisah Zakaria; Glen Christopher Arnold
International Journal of Bonds and Derivatives (IJBD), Vol. 2, No. 4, 2016

Abstract: This study investigates the short- and long-run share return performance of politically linked companies in the event of a spin-off during the period 1980 to 2011. The result shows that the group of politically linked parent companies significantly outperformed the group of non-politically linked companies during the few days surrounding the announcement date even after an adjustment for size. This indicates that the market anticipates increased value for politically linked parent's shareholders and potential exploitable stock market inefficiency. However, after allowing for size, evidence indicates that spin-offs by the politically linked entities do not demonstrate abnormal performance in the subsequent three-year period.

Online publication date: Fri, 06-Jan-2017

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