50+ Years of Diversification Announcements
Mehmet E. Akbulut and
John Matsusaka ()
The Financial Review, 2010, vol. 45, issue 2, 231-262
This paper studies announcement returns from 4,764 mergers over 57 years to shed light on several controversies concerning corporate diversification. One prominent view is that diversification destroys value because of agency problems or internal investment distortions, but we find that combined (acquirer plus target) announcement returns are significantly positive for diversifying mergers throughout the period, and no lower than the returns for related mergers. The returns from diversifying acquisitions fell after 1980, and investors rewarded mergers involving financially constrained firms before but not after 1980, consistent with the idea that the value of internal capital markets declined over time.
References: Add references at CitEc
Citations: View citations in EconPapers (20) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:finrev:v:45:y:2010:i:2:p:231-262
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0732-8516
Access Statistics for this article
The Financial Review is currently edited by Cynthia J. Campbell and Arnold R. Cowan
More articles in The Financial Review from Eastern Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().