The Effect of Voluntary Spin-Offs on Stock Prices: The Anergy Hypothesis

This study investigates the corporate spin-off. It provides the institutional details of the spin-off, an analysis of alternative hypotheses to explain spin-offs, and an event study. In addition, it contains a detailed analysis of the motives for spin-offs as provided by the companies. Anergy is the opposite of synergy, a diseconomy present in a company that can be removed by spinning off a portion of the company. The evidence suggests that anergies are present in many spin-offs and help account for their occurrence.