Research Seminar – Dr. Sahn-Wook Huh

Join us for our next research seminar with Dr. Sahn-Wook Huh, Fulbright Canada Distinguished Chair at the Sprott School of Business!

*Click this Zoom link to join the seminar on March 10th – no rsvp required*

Talk: Liquidity Spillovers: Evidence from Two-Step Spinoffs

Abstract

How does an idiosyncratic shock to the liquidity of a stock affect the liquidity and prices of related stocks? Utilizing the feature that the second stage of a two-step spinoff increases the float of an already-public firm, we document strong evidence that the enhanced liquidity of spun-off firms spills over to their industry peers after the spinoffs. These liquidity spillovers lead to value spillovers as well. The improved liquidity also induces greater pricing efficiency and larger institutional holdings in those stocks. The results lend support to the notion that the prices of spun-off firms provide additional public information about the related firms, thereby ameliorating information asymmetry in those firms.