1 Spin-offs and Long-run Stock Price Performance in the Nordics

Abstract

This study examines the long-run stock price performance of spin-offs in the Nordic equity markets between 2001 and 2024. Using a final sample of 50 completed transactions, buy-and-hold abnormal returns (BHAR) are estimated over 6, 12, 24, and 36 months for parent firms, spun-off entities, and the combined shareholder position, benchmarked against country-specific MSCI indices. Spun-off entities earn positive and statistically significant long-run abnormal returns, most clearly at 36 months, while parent firms and combined positions show weaker evidence, so the main hypothesis is only partially supported. Cross-sectional regressions provide little evidence that industrial focus or the relative size of the spun-off entity explains these returns. In a complementary analysis, the combined market value at the first trading day is on average 16.3 percent higher than the parent's pre-announcement value. The results are concentrated in Swedish observations (62 percent of the sample). These findings indicate that any long-run outperformance after Nordic spin-offs is concentrated in the spun-off entities and in Sweden, and that its magnitude, sensitive to benchmark choice and sample composition, is best read as suggestive rather than conclusive.