Spinoffs and wealth transfers: the Marriott case

Article Abstract:

Marriott Corp.'s decision to transfer equity in its management businesses to shareholders in 1993 is examined. The spinoff provides a good example of how wealth can be transferred from bondholders to shareholders by restructuring a company's businesses through a pro rata equity allocation in some of these businesses. The case is unusual in that the deal involved nearly 80% of the value of Marriott's equity and bolstered its leverage. It also shows that bondholders can force a change in corporate policy even without explicit covenant protection.

Hotels & Motels, Hotels (except Casino Hotels) and Motels, Hotels and motels, Case studies, Stockholders, Securities, Marriott Corp., MHS, Bondholders

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Corporate focus and value creation evidence from spinoffs

Article Abstract:

Companies that have spun off cross-industry entities generally exhibit operating performance improvements. The finding confirms the corporate hypothesis that spinoffs generate value by enabling managers to concentrate on the company's main businesses. Spinoffs also generate value by encouraging managers to discontinue funding to a company's lagging units. Substantial excess returns can also be observed about the time of an announcement regarding cross-industry spinoffs.

Divestiture Analysis, Economic aspects, Subsidiary corporations, Subsidiaries

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CEO turnover and outside succession: a cross sectional study

Article Abstract:

The probabilities of turnover, forced turnover and outside succession are a function of the similarities of companies in an industry. It was also found that intra-industry appointments of chief executive officers are less expensive. There is also greater precision in terms of performance measures in homogenous industries. Moreover, the possibility that a fired CEO is succeeded by another from a company in a similar industry rises with industry homogeneity.

Chief Executive-Functions, Analysis, Chief executive officers, Executives, Employee turnover, Chief executive officer successions

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