There are 3 versions of this paper. Recently equity carve-outs in US technology stocks appear to violate a basic premise of financial theory: In our sample, holders of a share of company A are expected to receive x shares of company B, but the price of A is less than x times the price of B. A prominent example involves 3Com and Palm.

Arbitrage does not eliminate these blatant mispricing due to short sale constraints, so that B is overpriced but expensive or impossible to sell short. Evidence from options prices shows that shorting costs are extremely high, eliminating exploitable arbitrage opportunities. Carve-out, mispricing, arbitrage, put-call parity, short-sale constraints.

Mispricing in Tech Stock Carve-Outs May CRSP Working Paper No. Woodlawn Avenue Chicago, IL United States Phone Fax. Fama-Miller Working Paper Series.

CiteSeerX — Can the market add and subtract? Mispricing in tech stock carve-outs

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Lamont Harvard University - Department of Economics Richard H.

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Thaler University of Chicago - Booth School of Business; National Bureau of Economic Research NBER. Can the Market Add and Subtract? Mispricing in Tech Stock Carve-Outs CRSP Working Paper No.

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You are currently viewing this paper. Mispricing in Tech Stock Carve-Outs NBER Working Paper No. Mispricing in Tech Stock Carve-outs Journal of Political Economy, Vol. Abstract Recently equity carve-outs in US technology stocks appear to violate a basic premise of financial theory: Lamont Contact Author Harvard University - Department of Economics email Littauer Center Cambridge, MA United States.

Thaler University of Chicago - Booth School of Business email S. National Bureau of Economic Research NBER Massachusetts Avenue Cambridge, MA United States. Download this Paper Open PDF in Browser. Related eJournals Chicago Booth: Fama-Miller Working Paper Series Follow. Fama-Miller Working Paper Series Subscribe to this free journal for more curated articles on this topic FOLLOWERS. Market Efficiency eJournal Follow. Market Efficiency eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS.

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