Analysis of The Impact of Spin-Off Announcements on Stock Performance: Evidence from Asia
DOI:
https://doi.org/10.59261/jbt.v7i3.713Keywords:
Spin-offs, Stock Performance, Event Study, Abnormal Returns, Market Reactions, AsiaAbstract
Background: This research is motivated by the increasing practice of spin-offs as a strategy for company divestment in responding to market dynamics and global business efficiency. The announcement of a spin-off is often considered a positive signal by investors because it is considered to be able to increase the company's business focus and create added value for shareholders. However, the results of previous research still show mixed findings regarding the influence of spin-offs on stock performance, especially in the Asian region.
Objective: This study aims to analyze the impact of spin-off announcements on the stock performance of public companies in Asia for the period 2000–2025 and compare market reactions between developing and developed countries as well as between Asian subregions.
Methods: The study used a quantitative approach with the event study method and the Constant Mean Return Model on 74 samples of spin-off events.
Results: The results showed that the market responded positively on the event day and one day after the announcement, which was demonstrated through significant Average Abnormal Return (AAR) and Cumulative Average Abnormal Return (CAAR) values. However, in the period after the announcement, there was a market correction that showed that investor reactions were short-term. In addition, no significant differences were found between market reactions in developing and developed countries as well as between Asian subregions.
Conclusion: This study concludes that spin-off announcements provide signals that tend to be ambiguous and are heavily influenced by the market context of each country.
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