Excess value and restructurings by diversified firms

Gayané Hovakimian

Journal of Banking & Finance, 2016, vol. 71, issue C, 1-19

Abstract: We examine whether restructuring decisions by diversified firms are related to their excess values. We find that changes in diversification level, measured as changes in the number of segments or number of industries, are positively and significantly associated with excess values. Further, at lower levels of excess values, firms are significantly more likely to increase focus than maintain their existing levels of diversification and, at higher levels of excess values, they are significantly more likely to diversify further than maintain or reduce their current levels of diversification. These findings indicate that excess value variations are meaningful and predict restructuring decisions.

Keywords: Diversification; Conglomerates; Excess value; Diversification discount; Restructuring (search for similar items in EconPapers)
JEL-codes: G31 G34 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:71:y:2016:i:c:p:1-19

DOI: 10.1016/j.jbankfin.2016.04.020

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