Business portfolio restructuring, prior diversification posture and investor reactions

Robin T. Byerly, Bruce T. Lamont and Terrill Keasler
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Robin T. Byerly: Department of Management, Appalachian State University, P.O. Box 32089, Boone, NC 28608-2089, USA, Postal: Department of Management, Appalachian State University, P.O. Box 32089, Boone, NC 28608-2089, USA
Bruce T. Lamont: Department of Management, Florida State University, College of Business, Tallahassee, FL 32306-1042, USA, Postal: Department of Management, Florida State University, College of Business, Tallahassee, FL 32306-1042, USA
Terrill Keasler: Department of Finance, Banking & Insurance, Appalachian State University, Boone, NC 28608, USA, Postal: Department of Finance, Banking & Insurance, Appalachian State University, Boone, NC 28608, USA

Managerial and Decision Economics, 2003, vol. 24, issue 8, 535-548

Abstract: This study examined firm performance in market reaction to two types of business portfolio restructuring announcements: refocusing and repositioning. We predicted that market performance effects for these two types of strategic restructurers would be moderated by prior diversification posture. The theory behind these expectations was built on a general premise that restructuring strategy would be more favorably viewed by the market as performance enhancing when it offered greater potential for organizational transformation. Results showed strong support for our conclusion that prior diversification posture poses a significant contingency factor in restructuring firms' strategic choices. Further, the market tended to respond more favorably with this sample to repositioning restructuring choices. Copyright © 2003 John Wiley & Sons, Ltd.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:24:y:2003:i:8:p:535-548

DOI: 10.1002/mde.1116

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