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The Soul of the Corporation: How to Manage the Identity of Your Company by John R. Kimberly, Hamid Bouchikhi

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Chapter 6. When Should the Cord Be Cut? Managing Identity in Spin-Offs

In the March 7, 2005 issue of Fortune,[1] Shawn Tully wrote: “For investors who crave adventure, no area is more fraught with extremes of profit or doom than businesses newly liberated from the grip of corporate giants.” The extremes Tully is referring to are illustrated by the contradictory findings of two reviews on spin-off performance. In 2002, the Booz Allen Hamilton consultancy studied 232 spin-offs undertaken during the 1990s by companies listed in the Standard & Poor’s 500-stock index. In the two years following the split, the survey showed that only 26 percent of the spin-offs outperformed the index.[2] On the other hand, a more recent study of 88 spin-offs undertaken ...

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