Abstract
This paper investigates whether increased corporate focus surrounding a spin-off is associated with abnormal short-run and long-run share return performance from January 1980 to April 2011. By looking at the share return performance of both focus-increasing and non-focus-increasing parent firms, we find evidence against the claims of the focus-increasing hypothesis. Our results show that focus-increasing parent firms significantly underperformed when compared to their counterparts in the non-focusincreasing sub-sample during the few days surrounding the announcement date, even after adjusting for firm size. We also observe that spin-offs by the focus-increasing entities fail to demonstrate abnormal performance in the long-run period of three years.