Long-Term Outperformance of Equity Carve-Outs?--Evidence from Germany (Scientific Research‪)‬

1. Introduction According to Schipper/Smith [2], an equity carve-out (ECO) is defined by a company selling stock in a subsidiary via an initial public offering (IPO). From an investor's perspective there is some rare empirical evidence that these new listings outperform other initial public offerings in the long term (1). Vijh [3] who indirectly compares US equity carve-outs and common IPOs presents first findings in this direction and explains his results by the strategic focus of carve-outs, parents as an active and superior monitors and reduced overpricing due to reputational aspects (2). However, Brav et al. [4] showed that the results of Vijh [3] are likely to be induced by model misspecification. Prezas et al. [1] find a significant three year underperformance of equity carve-outs compared to common IPOs. The contradictive evidence presented so far indicates the valuable contribution of additional results from other stock markets. Our paper aims at analyzing the pricing and performance of equity carve-outs in Germany.