“…Denis, Denis, and Sarin (1997), Hyland (1996), and Rajan, Servaes, and Zingales (2000) examine why the diversification discount exists. Wheatley, Brown, and Johnson (1997) and Krishnaswami and Subramaniam (1998)], improve the incentives of division managers [Aron (1991)], or improve the subsidiaries' access to external capital [Krishnaswami and Subramaniam (1998)]. The motive for spinning off that is most related to debt choice is that firms may spin-off to expropriate wealth from debtholders by allocating most of the debt to one of the entities.…”