Abstract
Little research has examined the performance implications of the parent-child relationship post spin-off. Although the parent provided oversight of the child prior to the spin-off, effects of post spin-off links to the child remain unclear. Applying transaction cost and agency theories, our study of 142 firms spun-off between 1986 and 1997 examines how oversight and ownership by the parent firm influence stock market performance post spin-off. We find that while child firms benefit from some links to the parent, having too many links is negatively related to performance. The findings suggest that there is a balance between having too much parental involvement and not enough. Our study extends understanding of post spin-off child firm performance and provides valuable insights for both parent and child firms.
Original language | English (US) |
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Pages (from-to) | 1083-1098 |
Number of pages | 16 |
Journal | Strategic Management Journal |
Volume | 32 |
Issue number | 10 |
DOIs | |
State | Published - Oct 2011 |
Externally published | Yes |
Keywords
- agency theory
- corporate strategy
- governance
- spin-offs
- transaction cost economics
ASJC Scopus subject areas
- Business and International Management
- Strategy and Management