Abstract

The first chapter provides an overall introduction of the thesis. The second chapter includes a review of the extant literature related to the determinants and wealth effects of completed corporate spinoffs, their board structure, and the information environment surrounding such transactions. Prior studies examine different aspects of determinants and consequences of completed spinoffs. Building on existing knowledge, we aim to explore the determinants and outcomes of the incomplete population in the following chapters. The third chapter focuses on the performance and board composition of parent firms with
completed and incomplete spinoffs. Using a sample of 1,526 corporate spinoff announcements from 1980 to 2016, we find that both market and accounting performances decline in firms with
incomplete spinoffs at a higher rate than those completing the transaction. We establish that spinoff incompletion is value deteriorating and performance damaging for parent firms over the long run. Key findings indicate that parent firms with CEO duality are more likely to leave their spinoffs incomplete, while firms with older board members, longer tenure, more independent members,
and smaller boards are more likely to complete their spinoffs. Moreover, in the subsample of incomplete spinoffs, firms with more independent board members, larger boards, more gender-
diversified boards, and boards with older members and longer tenure are less likely to abandon the spinoff without any official withdrawal announcement.
The fourth chapter provides evidence on the predictive powers of holding a conference call (Call) as well as its sentiment. Using a sample of 700 announced corporate spinoffs from 2002 to 2016,
we show that firms that have a call at the time of announcement are more likely to complete the spinoff eventually. Also, supporting the impression management hypothesis of calls sentiment, we find that calls with more positive sentiment are more likely to stay incomplete. Approval on the tax-free status of an announced spinoff has significant power in predicting its completion.
Moreover, firms’ board composition and market reaction to spinoff announcement play a significant role in spinoff incompletion likelihood. Finally, the fifth chapter concludes the thesis findings and provides an overall interpretation and contributions of this research.