We investigate whether operating performance improves when a firm creates traded equity claims on a subsidiary without relinquishing control. We find that the change in a parent firm’s operating performance following an equity carve-out is negatively related to the fraction of subsidiary...

On average, insiders are net sellers of their firms' common stock for several months before announcements of new common stock and convertible debt issues. There is no evidence of abnormal insider trading before announcements of straight debt issues. These results suggest that the prospect of...