The Parent Company Puzzle: When is the Whole Worth Less Than One of Its Parts

摘要: This paper examines seven instances in which the market value of a parent company was less than its holdings publicly traded subsidiary. Efforts are made to explain this "parent puzzle" terms taxes, agency costs, liquidy effects and noise trader risk. None them work. The only explanation consistent with evidence is mispricing subsidiary shares associated downward sloping demand curve. As further support view, five corporate control transactions, all designed exploit apparent mispricing, were initiated while research progress.