Importance Considering crisis phenomena in the global economy, large business restructuring becomes more relevant for holding structures. Entities take into account the existing circumstances to choose a restructuring method, thereby determining the future return on such a deal for the shareholders. Objectives This research examines the most substantial reasons for spin-offs and analyzes the efficiency of this restructuring strategy. Methods The research reviews both theoretical and practical studies of economists into corporate deals and restructuring. It identifies the most significant premises of shareholders for restructuring as spin-off, provides empirical examples of excess returns within various time periods. Results The findings evidence the excess return on shares of the company that approached to spinning off as a restructuring option. The return for investors on spin-offs, on average, exceeds the return gained as a result of other restructuring scenarios. Conclusions and Relevance Shareholders, more often than not, resort to spinning-off to derive agency benefits, i.e. looking to create additional economic motivation for managers and reduce other agency costs. Spinning-off often allows to extract hidden value for shareholders within the medium term. It is important to understand the rationale for, and return on spin-offs in order to articulate incentive strategies for top managers in large corporations and diversified holding structures.
Keywords: mergers and acquisitions, value creation, publicly traded companies, above-the-market returns, stock market
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