Cumulative abnormal returns (CAR) for all the nonconvertible bonds of a sample of 37 firms that announced and completed a spin-off between 1979 to April 30, 1998. Spin-offs are identified from the CRSP tapes, the Security Data Company's (SDC) Worldwide Acquisition database, publications such as Moody's Dividend Records, Mergers and Acquisitions, and news wires and articles from Lexis- Nexis and the Wall Street Journal for the period 1979 to early 1998. All nonconvertible bonds of the parent firm that have trader quotes available in and around the spin-off announcement month are Identified from the monthly bond price data in the Fixed Income Database (FID). Monthly total return is obtained from the Fixed Income Database for each event month. The announcement is Identified as month 0. An industry-maturity- adjusted benchmark index is constructed from six Lehman Brothers Corporate Bond indexes in the dimension of industry and maturity. For each bond the return on the industry-maturity- benchmark index is subtracted from the corresponding monthly raw return in each event month to calculate the abnormal return. The abnormal returns are computed on a per firm basis, by first aggregating across all bonds for the same firm and then taking the average across firms in each event month. Cumulative abnormal returns are then calculated for three event windows, i.e., for three months, seven months, and 13 months, around the spin-off announcement month. The parametric test statistic of Barber and Lyon (1997) is used to test the significance of the mean cumulative abnormal return.
She holds a doctorate in Business Administration (University of A Coruña, UDC), a bachelor’s degree in Business and Economic Sciences (Autonomous University of Madrid, UAM) and a bachelor’s degree in Industrial Psychology (National University of Distance Education, Spain, UNED). Her involvement in research and entrepreneurial development began in 2000 as the manager of Fundación R. She continued this work as the designer of the strategic project for and manager of the Science and Tech- nology Park at the UDC, and then as a contracted doctor lecturer at the UDC, where she now teaches Strategic Management subjects in the Economic Analysis and Business Administration Department and coordinates the business plans of the university’s MBA students. Her lines of research include academic entrepreneurship, spin-offs and the design of strategic management support tools. She belongs to the Global Entrepreneurship Monitor (GEM) team and the Regional Entrepreneurship Research Network (RIER).
As we have seen the pecking order of capital structure limits information asymmetries, but that does not mean that it is necessarily good for the performance of young spin-offs. External capital can bring positive effects with their entry into the firm (e.g., professional management, contact networks, or signaling of quality) (Garmaise, 2001). If this is the case, pecking order theory might in fact be reversed when using it as a predictor for future performance – having greater amount of external capital, and not relying on debt can be a sign of quality. Some researchers have explored this avenue, among others Garmaise (2001) and Cosh et al. (2009) They have found that in the context of ASOs, the pecking order appears to be reversed. This reversed pecking order entails that taking external capital on board has a higher saliency than debt. Even internal funds can have a lower priority than attracting some forms of external capital, according to Wright et al. (2006). In this case, the external capital, and possible added value that comes with it, surpasses the drawbacks of information asymmetries. This will be tested in hypothesis H1, and H2, where I will see whether or not increased levels of debt and equity, affects non-financial and financial performance.
Initial capital was the capital raised within 18 months of start-up. The period of 18 months is introduced to allow for management discretion in the founding of academic spin-offs (Clarysse et al. 2007). The exact date of legal founding of a spin-off does not necessarily reflect its ambition. Often in Belgium neither investors nor universities want to take the risk of founder’s liability. A common way to get around this is to start-up the company with minimum capital and only the individual entrepreneurs as founders of the company. Six months later the capital of the company can be increased to the real target and the university and/or investors are included as shareholders. To circumvent these issues Clarysse et al (2005) suggested that a period of 18 months after the official legal founding date of the company is appropriate if one wants to measure the real initial capital. The logarithm was also used for parametric statistical tests in order to subscribe to the normality assumption.
Some universities seem to fit the schema of universities as key institutions within a RIS but in practice, there is a limit to how far the system idea can be taken. For example, larger and more prestigious universities as in London which are the ‘most active knowledge ventures’ are more likely than less research intensive universities to create the conditions under which spin-offs contribute to the stock of local knowledge intensive firms (or service-based firms), creating specialist local demand for factors of production. The impact of universities, however, is most substantial in small and medium-sized regions (Goldstein and Drucker 2006) which have the advantage that the existence of networks is more transparent (Huggins 2008).
University spin-offs (USOs) are conceptualized in this study as a specific class of in- dependently established technology-based start-ups that bring university knowledge to market, mostly founded by university graduates or staff members (Pirnay et al. 2003). USOs are relatively poor in resources and lack skills beyond their technology field, due to their young age and one-sided education (Vohora et al. 2004; van Geenhuizen and Soetanto 2009; Soetanto and van Geenhuizen 2015), but they improve this situation by connecting themselves with other Triple/Quadruple Helix actors, like large and small companies, public authorities, financial investors, etc. The activity of bringing inven- tions and other solutions created at university to market or societal use, could be seen as a passive intermediary role. However, in their networks, USOs may actively perform a mediator role while connecting themselves with other Triple Helix actors and affect not only the knowledge being commercialized but also the behavior of networks and actors involved. In this line of thinking, Doganova (2013) distinguishes between the role of spin-off firms in transformation and transfer of knowledge between different worlds, university and business, and the mediator role for a variety of actors, like researchers, users, customers, investors, etc., thereby also affecting and sometimes even transform- ing the networks and network participants. The latter tends to be associated with exploration activity and collective learning; hence, a diversity of actors is seen as critic- ally important. While much attention has been paid to intermediaries like university transfer offices, knowledge intensive service firms (KIBS), knowledge brokers and knowledge platforms as living labs, USOs have remained out of this range (Howells 2006; Todeva, 2013; Meyer and Kearnes 2013; Schlierf and Meyer 2013; van Geenhuizen 2014) with the exception of Doganova (2013).
A combination of both interviews and literature research is used in empirical research about to extent university spin-offs consider their market while developing their value proposition. In order to find an answer, three interviews were conducted and thirteen articles were used. The combination of these methods made it able to give a broader view towards the situation than when only one method was used. The conducted research showed that university spin-offs know how important the market is for their everyday business and that they try to implement it in the most successful way. In order to do so, university spin-offs have conversations with their clients, conduct evaluation meetings, meet with advisors and try to notice what is currently going on in the market and trying to adapt to it. All these different elements are considered while university spin-offs are developing their value-proposition. Hereby does the spin-offs try to determine the market‟s create gains, relieve the pains and create the necessary products and services to make customer jobs as good as possible. While taking the research in mind, it can be said that the university spin-offs consider their market quite well while they are developing the value proposition. However, before the way to the market is found, the university spin-offs tend to „over- improve‟ their prototype as a result of the fact that the researchers which started the spin-off have some lack of commercial knowledge and experience. Therefore it can be said that at the start of the process the spin-off could be focused slightly more on the market instead of the product to find the way to the market in an earlier stadium. Therefore the answer to the research question can be stated as follows; the university spin-offs consider their market quite well while they are developing their value proposition, but that asking help in commercializing the product/service could make the process even better.
In recent years, the increase in competitiveness, as a result of the economic globalization and crisis, has caused the bankruptcy of many Italian small family businesses working in traditional industries. Meanwhile, family firms that have been working in a perspective of process and product innovation have been able to maintain a durable competitive advantage. In particular, enterprises that have shown a particular vitality are spin-offs, founded by an innovator entrepreneur with an academic background: these have often found their funding in self-financing and family and public resources in the pre-seed and seed stages of the project. However, these spin-offs often have difficulty financing the start-up phase of the project with external resources due to risk and informational opacity related to innovative processes. The literature grounded on innovation funding has highlighted the informative opacity problem mainly caused by family entrepreneurs' difficulty to communicate innovation characteristics and commercial potential to financial markets and by the inability to identify individuals who are more available to finance innovative investments. Therefore, it is particularly difficult for investors to assess family small- and medium-sized
Transaction planners have been linking IPOs with spin-offs for many years. An example includes the 2011 IPO of Sunoco subsidiary SunCoke Energy. At the same time that SunCoke completed the IPO, it used the proceeds of a long term borrowing to repay indebtedness to its parent. Sunoco later spun off all of its remaining shares of SunCoke Energy stock. Another example is the IPO of GECC subsidiary Synchrony Financial in 2014. As part of the financing arrangements, Synchrony paid off all of its outstanding intercompany indebtedness to GECC and entered into a new term loan facility with GECC. GECC has indicated that it plans to distribute the balance of its shares in Synchrony Financial to GECC's stockholders in 2015.
Eckbo and Thorburn (2013) reviewed literature on corporate financial restructuring, including breakup transactions such as divestitures, spin-offs carve-outs, leveraged recapitalizations and leveraged buyouts (LBOs), aimed at seeking out the motives behind corporate reorganization and establishing if the type of selection tools for restructuring were influenced by the kind of transaction. They infer that many restructuring strategies are usually reactions to excessive conglomeration and reverse costly diversification discount. Their study revealed that corporate restructuring may be introduced by top management or outside sponsors like buyout funds. They also noted that sometimes, in order to address arising ‘threat from the market for corporate control’, (Eckbo and Thorburn, 2013, p.162) the defensive restructuring is undertaken to unlock value by selling underperforming assets to increase the value of a company to its shareholders.
xiv SUCCESS FACTORS OF CORPORATE SPIN-OFFS similar at the pan-national level, and emphasise networking and relationships as a source of success. As newly created firms in general, Spin-Offs are especially suitable for the analysis of a number of important aspects, e.g. the kind of knowledge transfer (Intellectual Capital), the role of the parent institution or the type of relationship to the parent institution (incubation and sponsorship). Policy-makers in some countries have acknowledged the unique nature of Corporate Spin-Offs by including them into national 4 and regional 5 development policies. The facilitator role of Spin-Offs for knowledge transfer and new firm creation is the target of policy action in other countries, especially with regard to Institutional Spin-Offs 6 . The European Commission has recently emphasised the importance of supporting Corporate and Institutional Spin-Offs due to their rising importance within corporate strategy and their considerable potential for competitiveness and employment 7 .
questionable, whether those can support the knowledge acquisition about the market, customers, and investors, to a valuable degree. And although the university department seemed to possess most of the competencies comprised by Rasmusssen, Mosey & Wright (2011) and Rasmussen & Borch (2010) a key resource was missing, namely attracting an industry partner to cooperate as a champion for the project and give insights to the industry. As the spin-off company expresses itself, it is right now in the state of “valley of death”, that describes the phase of commercialization in which a scale up funding is necessary to continue with the business (Frank, Sink, Mynatt, Rogers & Rappazzo, 1996). The spin-off managed to get start-off funding, and although certified by the European Commission Seal of Excellence award for outstanding performance, it failed to obtain additional financial resources to push through the commercialization process and build a successful business. This struggle of passing this “threshold of sustainability” (Vohora, Wright & Lockett, 2004) is also reflected in the sales numbers of the product. Although the spin-off was founded in 2014 and started selling the product one year after, only 24 items have been sold so far. Contracts for future assignments have not been made since then so that future perspectives are unclear and overall question the spin-offs potential to survive. But can the lack of industry network be the only reason for the bad survival chances or do other factors play a role in here? A greater problem seemed rather be the lack of resources and, with greater focus, the lack of commitment of the founders. Barney (1991) stated that tangible and intangible resources can contribute to a firm’s effectiveness. Both founders worked only partially on the project while at the same time being employed by the university as research or teaching staff. Time to engage with potential customers and dedicate time to developing networks was rare and could not have been overtaken by employees since the spin-off is a two-man company. Thus, intangible resources such as commitment were and are still lacking. Nevertheless, having contact with peer groups and networking with successful business people can have a positive learning effect on to the entrepreneurial learning process (Bandura, 1977). Furthermore, it is questionable whether the commitment is still sufficient. One of the founders works for an external company and is not fully associated with the university anymore. And has, therefore, less time to work on the project himself.
Corporate spin-offs are important corporate restructurings that are associated with significant positive abnormal stock returns at their announcement. Recent research has investigated the sources of these gains. There has been considerable empirical support for theories that argue that excessive diversity of the assets of a large firm gives problems. A spin-off separates diverse units of the firm and results in two companies that have dissimilar assets. This paper explores impli- cations for the organization and optimal corporate policies of these new firms. I argue that because the assets of the two new companies are dissimilar, their opti- mal corporate policies and internal organization also should be different. The impossibility to implement these dissimilar optimal policies in the original firm likely has aggravated the problems leading to the spin-off.
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We propose a theory of firm dynamics in which workers have ideas for new projects that can be sold in a market to existing firms or implemented in new firms: spin-offs. Workers have private information about the quality of their ideas. Because of an adverse selection problem, workers can sell their ideas to existing firms only at a price that is not contingent on their information. We show that the option to spin off in the future is valuable so only workers with very good ideas decide to spin off and set up a new firm. Since entrepreneurs of existing firms pay a price for the ideas sold in the market that implies zero expected profits for them, firms' project selection is independent of their size, which, under some assumptions, leads to scale-independent growth. The entry and growth process of firms in this economy leads to an invariant distribution that resembles the one in the US economy. Satyajit Chatterjee
This study used the questionnaire for data collection. In the questionnaire, in addition to the basic questions about the object were tested, the others questions were asked to filled in the seven point Likert scale. To ensure that the content of the questionnaire were correctly reflected the characteristics of latent variables, the authors first refer to the scale of domestic related research and conclusion. On this basis, through the investigations and meetings, the authors respectively discussed with the related government department managers, head managers who charged in spin-offs in the university, manager of spin-offs, and the scholars, after that, we created the initial questionnaire and a small-scale is pre-tested. Then, aiming at revising the problems reflected from pre-test, we re-designed or eliminated the inaccurate problems. Finally, the questionnaire can be taken in use.
success of the spin-off (Vohara et al., 2004). Vohara et al. (2004) propose that the pre-organisation phase represents the steepest learning curve for the academic entrepreneur. Prior entrepreneurial experience, human capital and access to networks of expertise are very valuable at this phase, and lacking these conditions makes the learning curve even steeper. The next juncture is credibility as a spin-off, where spin-offs are required to access, acquire and assemble resources with which to commence business operations. Once this juncture is passed, the spin-off can proceed to the re-orientation phase, where actual returns can be generated by continuously identifying, acquiring and integrating resources and offer something of value to customers (Galunic & Eisenhardt, 2001). These resources must be used to alter previous decisions based on new information and knowledge (Vohara et al., 2004). Before the final phase is reached, the final junction, sustainability, must be overcome. Here it is required to continuously reconfigure existing resources, capabilities and social capital based with information, knowledge and resources. When this is achieved, the sustainable returns phase is entered, and the spin-off can start thinking about upscaling their business (Bigdeli, Li & Shi, 2015).
It makes several contributions. First, as there is no evidence on the influence of the firm size effect in the event of a spin-off in the Malaysian capital market, the present study adds to growing body of international evidence in corporate spin-offs. Second, we employ two novel market indices: Malaysia All-Shares Equal Weight Index (MAS-EWI) and Malaysia All-Shares Value Weight Index (MAS-VWI) 1 . Both benchmarks are more comprehensive than any used in previous Malaysian event studies which commonly adopt two popular market indices, namely FTSE Kuala Lumpur Composite Index (KLCI) and FTSE Bursa Malaysia EMAS Index which fail to represent the broader Malaysian market 2 . Third, we use Cumulative Abnormal Returns (CARs), Buy-and-Hold Abnormal Returns (BHARs) and Market Model as the abnormal return metrics to provide a more comprehensive analysis of share return performance, whereas previous international studies used only one of these models in their analysis.
three different types of business model: product-based, technology-based and service-based. This classification matches the distinction proposed by Stankiewicz (1994), which is based on the main modes of activities in which firms operate; academic spin-offs can be product- oriented, technology-oriented or consultant. The product-oriented mode is organised around a well-developed product concept, the technology-oriented mode relates to the development of technologies sold through licenses/partnerships and the consultancy mode supplies services exploiting distinctive competencies. On one hand, research services require activities which are not generally based on patents and do not demand significant technological development. In contrast, creating a product/technology requires huge investment in each step of the development process (Druilhe and Garnsey, 2004). Thus, product-oriented business models are considered “high potential companies” created to exploit commercial research findings. Service-oriented companies, also labelled “lifestyle”, are instead created to exploit tacit knowledge accumulated from academic experience (Timmons, 1994). Thus, this last group strengthens the non-commercial nature of academic spin-offs. Moreover, service-based spin- offs present a limited growth potential compared with product- and technology-based ones, given that they require the direct involvement of the founders. This is likely to create constraints in terms of the business and geographical scope of activities. For these reasons, we argue that VC firms should be less confident in investing in academic spin-offs adopting service-oriented business models. Thus, the following hypothesis is suggested: