@techreport{NBERw8302,
 title = "Can the Market Add and Subtract? Mispricing in Tech Stock Carve-Outs",
 author = "Owen A. Lamont and Richard H. Thaler",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "8302",
 year = "2001",
 month = "May",
 URL = "http://www.nber.org/papers/w8302",
 abstract = {Recent equity carve-outs in US technology stocks appear to violate a basic premise of financial theory: identical assets have identical prices. In our 1998-2000 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.},
}