We develop an event study model, named as VESA (Value-based Event Study Analysis), which is basically based on the seminal works of M&M (1958, 1961, 1963). Using the VESA method, we test whether the changes of the intrinsic firm values come from the events experienced by the firms. We have studied the effects of equity investments on the firm values, which is measured by the intrinsic Q values. 

The empirical results are as follows; first of all, the equity investments show a statistically significant and negative changes in the intrinsic Q values. It means that the equity investments are value-destroying financial events. Second, the disposal of owned equity investments shows statistically significant and positive changes in the intrinsic Q values, but the intrinsic Q values are less than 1.0. It means that the disposal activities are not value-creating events.

Third, the same results are shown in the equity investment-regulated samples such as big business groups in Korea. It means that the regulations in equity investments are not so effective as the government agency expects.

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