The market response of equity carve-out announcements in Malaysian stock market
by Ken Chin-Chong Lee
International Journal of Business Forecasting and Marketing Intelligence (IJBFMI), Vol. 1, No. 3/4, 2010

Abstract: This study examines the influence of equity carve-out (ECO) announcements on the share prices of parent firms using a hand-collected sample of 64 ECO announcements made within the time period from year 2000 to year 2008. It is found that ECOs have a positive impact on parent firms' share prices around the announcement period. This suggests that investors in Malaysian stock market welcome ECOs as good news. The results of the entire sample of this study are generally consistent with other researchers' findings. However, using the subsamples grouped by the ultimate consequence of the proposed listing in the ECO announcements, the market responses of two subgroups are not the same. The cumulate average abnormal returns of a subsample, which consists of the parent firms that ultimately carved out their subsidiaries, are significant positive before the announcement and then decrease soon after the announcement date. On the other hand, the uptrend of the cumulative average abnormal returns of another subgroup, which consists of parent firms that failed to carve out their subsidiaries, continues for a longer period after the announcement date.

Online publication date: Tue, 12-Oct-2010

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Business Forecasting and Marketing Intelligence (IJBFMI):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email