Journal Article

Examining the performance effects of post spin-off links to parent firms: should the apron strings be cut?

Semadeni, Matthew, Cannella JR, Albert A.

2011

Overview

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.

• Publisher: John Wiley & Sons, Ltd,John Wiley & Sons,Wiley,Wiley Periodicals Inc
• Subject: 1986-1997 / Agency theory / Ausgründung / Business structures / Children / Companies / corporate strategy / Economic relations / Economic theory / Economies of scope / Eigentümerstruktur / Firm theory / governance / Investors / Musical agency / Organizational effectiveness / Organizational performance / Organizational structure / Ownership / Parent company / Parent participation / Parent-child relations / Parents / Parents & parenting / Principal-agent models / Prinzipal-Agent-Theorie / Securities markets / Shareholders / spin-offs / Spinoffs / Stock exchange / Stock exchanges / Strategic management / Studies / Subsidiary companies / transaction cost economics / Transaction costs / Transaktionskosten / Unternehmenserfolg / USA / Vorstand / Wirkungsanalyse