Examining the performance effects of post spin‐off links to parent firms: should the apron strings be cut? Academic Article uri icon

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. Copyright © 2011 John Wiley & Sons, Ltd.

author list (cited authors)

  • Semadeni, M., & Cannella, A. A.

citation count

  • 54

publication date

  • April 2011

publisher