The Pricing of Equity Carve-Outs

  title={The Pricing of Equity Carve-Outs},
  author={Alexandros P. Prezas and M. Murat Tarimcilar and Gopala K. Vasudevan},
This article examines the pricing of stock for 251 equity carve-outs during the 1986-95 period. We document a mean initial-day return of 5.83% and a mean one-week return of 5.43%. Among carve-outs, the initial underpricing is lower for issues represented by high prestige investment bankers and those that have a lower offer price. In comparison with 251 initial public offering (IPO) firms matched by size and book-to-market ratio of equity, carve-outs exhibit significantly lower initial-day… CONTINUE READING