Two-Stage Spinoff Asset Impairment Theory

This paper analyses two-step spinoff based on consequences of the expected future change in value of a stakeholder's claim and its ability to block a restructuring. We show that a two-step spinoff allows an otherwise blocked value increasing (one-step) spinoff to take place by using the market information that a minority equity carve-out generates. We develop a corporate governance tool that advocates maximizing shareholder wealth considering the claim of another stakeholder under two dimensional asymmetric information consisting of 1) unobservable asset impairment and 2) management conglomeration agency problem