STUDY OF IMPACT OF SPIN-OFFS ON SHAREHOLDERS WEALTH IN INDIA

Mr. Mahesh Bendre, Dr. Netra Apte

Abstract


Cases of demergers in Indian corporate world are increasing in recent times. Majority of the spin- offs that have taken place in India are associated with objective of overall value creation for the shareholders. The researcher has identified and studied 24 spin-offs that took place in India during 2012-2017. The result of this study has shown that demerger activity has an overall positive effect on shareholder wealth.  The most favourable time for share-holder wealth creation remains to be from demerger announcement date to the listing of demerged entity. During this phase, 80% of the cases have given 49% average returns.  However during the demerger announcement date and demerger effective date, only 60% of total stocks have given positive returns with 18% increase in average market capitalization. This behavior may reflect the uncertainty regarding the regulatory outcome and shareholders’ approval for the spin-off proposal from the Company.

Keywords


Demerger, Spin-offs, shareholder wealth

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References


 Investment Analysis and Portfolio Management (Author : Prasanna Chandra)

 Financial Management (M Y Khan, P K Jain)

 Fundamentals of Financial Management (Eugene Brigham, Joel Houston)

 The Analysis and Use of Financial Statement (Gerald White, Ashwinipaul Sondhi)

 The Dark side of Valuations(Aswath Damodaran)

 National stock Exchange (nseindia.com)

 Bombay Stock Exchange (bseindia.com)

 Bloomberg


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