Dummy variables are set equal to one for venture capital backed, equity carveout, reverse LBO, and High-Tech deals.
Relative to focused firms, issues by diversified firms are more likely to be equity carveouts and less likely to be in a High-Tech industry.
To control for this possibility, we include dummy variables for equity carveouts and reverse leveraged buyouts (LBOs).
The control variables in our regressions indicate that an IPO firm is more likely to be acquired if it is underwritten by a top tier investment bank, if it is an equity carveout, or if it lists on NASDAQ.
Lastly, in Model 4, we consider the impact of equity carveouts by interacting the equity carveout indicator with the M&A activity measure and each of the control variables.
This difference may be particularly relevant for our analysis of equity carveouts. For example, parent firms may be encouraged to retain certain portions of carved-out firms in order to take advantage of favorable tax issues or for reporting purposes.
(22.) Vijh, A., "The Positive Announcement-Period Returns of Equity Carveouts: Asymmetric Information or Divestiture Gains," Journal of Business (January 2002), pp.
New markets, new products, and new definitions excite a host of industries, and equity carveouts
, spinoffs, and demergers are regular occurrences.
Vijh, A., 2002, "The Positive Announcement-Period Returns of Equity Carveouts
: Asymmetric Information or Divestiture Gains?," Journal of Business 75 (Forthcoming).
The sample proportions in Panel B show that NYSE IPOs are more likely to result from equity carveouts
and reverse LBOs.