Two-Stage Spinoff Asset Impairment Theory
41 Pages Posted: 17 Feb 2010 Last revised: 8 Mar 2012
Date Written: February 24, 2012
This paper analyses two-step spinoff based on consequences of the expected future change in value of a stakeholder’s claim and its ability to block a restructuring. We show that a two-step spinoff allows an otherwise blocked value increasing (one-step) spinoff to take place by using the market information that a minority equity carve-out generates. We develop a corporate governance tool that advocates maximizing shareholder wealth considering the claim of another stakeholder under two-dimensional asymmetric information consisting of 1) unobservable asset impairment and 2) management conglomeration agency problem.
Keywords: Two-Stage Spinoff, Equity Carve-out, Restructuring, Divestiture, Multi-Dimensional Information Asymmetry, Agency Costs, Stakeholder Conflict
JEL Classification: G32, G34
Suggested Citation: Suggested Citation