Download or read book Exploring the Diversification Discount written by Donald F. Adkins and published by . This book was released on 2003 with total page 94 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Exploring the Diversification Discount A Focus on High Technology Target Firms written by and published by . This book was released on 2003 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: When firms choose to acquire others, those acquisitions can either be considered diversifying or non-diversifying. Whether the firm diversifies or not has been shown to affect the post-acquisition performance of that firm. Past merger and acquisition (M & A) research has identified a "diversification discount" when firms diversify through M & A activity. However managers continue to diversify, posing the question, "Why do firms continue to diversify in the face of research indicating negative post-acquisition performance"? The answer may be found in that much of the past research has treated all acquisitions the same by analyzing a wide cross-section of acquisitions from industries of all types. This assumption may be wrong, as not all acquisitions are the same. The present research attempts to build on past research by analyzing only a single segment of M & A activity the high-technology industry between the years 1994 and 1998. In addition, this study differs from past research by analyzing firm post-acquisition performance over a longer three-year period. The present research did achieve significant results that may help eliminate some of the clouds over diversification's true impact on M & A activity. A "diversification discount" was identified by the present research, confirming the findings of much of the past M & A literature.
Download or read book Exploring the Diversification Discount A Focus on High Technology Target Firms written by and published by . This book was released on 2003 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: When firms choose to acquire others, those acquisitions can either be considered diversifying or non-diversifying. Whether the firm diversifies or not has been shown to affect the post-acquisition performance of that firm. Past merger and acquisition (M & A) research has identified a "diversification discount" when firms diversify through M & A activity. However managers continue to diversify, posing the question, "Why do firms continue to diversify in the face of research indicating negative post-acquisition performance"? The answer may be found in that much of the past research has treated all acquisitions the same by analyzing a wide cross-section of acquisitions from industries of all types. This assumption may be wrong, as not all acquisitions are the same. The present research attempts to build on past research by analyzing only a single segment of M & A activity the high-technology industry between the years 1994 and 1998. In addition, this study differs from past research by analyzing firm post-acquisition performance over a longer three-year period. The present research did achieve significant results that may help eliminate some of the clouds over diversification's true impact on M & A activity. A "diversification discount" was identified by the present research, confirming the findings of much of the past M & A literature.
Download or read book Corporate Diversification written by Sattar Mansi and published by . This book was released on 2014 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Prior literature finds that diversified firms sell at a discount relative to the sum of the imputed values of their business segments. We explore this documented diversification discount and argue that it stems from the risk reducing effects of corporate diversification. Consistent with this risk reduction hypothesis, we find that (i) shareholder losses in diversification are a function of firm leverage, (ii) all equity firms do not exhibit a diversification discount, and (iii) using book values of debt to compute excess value creates a downward bias for diversified firms. When considering the joint impact to both debt and equity holders, we find that, on average, diversification is insignificantly related to excess firm value.
Download or read book Explaining the Diversification Discount written by José Campa and published by . This book was released on 1999 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Thecost of Diversity written by Raghuram G. Rajan and published by . This book was released on 1998 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Diversification Discount and Takeovers written by and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis explores the existence of a diversification discount in the German market for corporate control. It analyses bidder returns for a sample of 287 acquisitions by publicly listed German companies between 2001 and 2012. After presenting the relevant previous literature on the topic, an event study is combined with a univariate analysis to examine abnormal returns around the announcement date. Subsequently, a multivariate linear regression analysis is performed to explore which deal-, target- or acquirer-specific characteristics have the strongest impact on the results. The overall findings of this thesis are rather mixed, presenting evidence in favour and against a possible diversification discount in German transactions. It is found that the previous diversification status of the acquirer, the method of payment and the geographical scope of the acquisition have an impact on the share price reaction, but the diversifying nature of the deal alone cannot be linked to a strong influence on the return pattern.
Download or read book Diversification Discount and Targeted Stock written by Shlomith Zuta and published by . This book was released on 2002 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Diversification Discount written by Bill B. Francis and published by . This book was released on 2004 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine why some diversified firms trade at a discount and others at a premium. Specifically, we examine if the value premium (discount) of premium (discount) diversified firms can be explained by lower (higher) risk exposures and, hence, expected returns, relative to a portfolio of matching focused firms. Using a four-factor conditional asset-pricing model, we find that premium firms have higher expected returns while discount firms have lower expected returns than their corresponding portfolios of matching focused firms. This indicates that the value premium (discount) of premium (discount) diversified firms is due entirely to higher (lower) expected cash flows. In addition, we find that the average diversified firm has significantly lower mean risk exposures and expected returns than a portfolio of matching focused firms. This means that its value discount is due entirely to lower expected cash flows. This is in contrast to Lamont and Polk (2001) who attribute just over 50% of the variation in excess values to future cash flows. Our results also indicate that the value discount of the average diversified firm can be attributed entirely to the expected cash-flow dissipation of discount diversified firms.
Download or read book The Diversification Discount Cash Flows Versus Returns written by Owen A. Lamont and published by . This book was released on 1999 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Research Roundtable Discussion written by Belen Villalonga and published by . This book was released on 2003 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: Discussants: PHILIP G. BERGER, University of Chicago - Graduate School of Business; ROBERT F. BRUNER, University of Virginia - Darden Graduate School of Business; DAVID J. DENIS, Purdue University - Krannert School of Management; STEPHEN R. FOERSTER, University of Western Ontario - Richard Ivey School of Business; ROBERT H. GERTNER, University of Chicago - Graduate School of Business; STUART C. GILSON, Harvard Business School; JOHN R. GRAHAM, Duke University - Fuqua School of Business; LAURIE SIMON HODRICK, Columbia Business School; STEVEN N. KAPLAN, University of Chicago - Graduate School of Business; LARRY H.P. LANG, Chinese University of Hong Kong; VOJISLAV MAKSIMOVIC, University of Maryland - Robert H. Smith School of Business; JOHN D. MARTIN, Baylor University - Hankamer School of Business; JOHN G. MATSUSAKA, University of Southern California - Marshall School of Business; RANDALL MORCK, University of Alberta School of Business; GORDON M. PHILLIPS, University of Maryland - Robert H. Smith School of Business; HENRI SERVAES, London Business SchoolOrganized by: PETER TUFANO, Harvard Business SchoolAs teachers, we often face the challenge of helping MBA students understand important managerial issues where research is unsettled. This is one of a series of pieces written as a quick introduction to a controversial area which many of us have to touch upon in our courses: the diversification discount. Belen Villalonga has written an overview of some of the issues surrounding the diversification discount and assembled a selected bibliography on the topic. We then invited a small number of leading researchers and teachers in the field to comment on how they treat this topic in the classroom.
Download or read book Explaining the Diversification Discount written by José Manuel Campa and published by . This book was released on 2008 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Diversified firms trade at a discount relatively to similar single-segment firms. We argue in this paper that this observed discount is not per se evidence that diversification destroys value. Firms choose to diversify. Firm characteristics, which make firms diversify, might also causethem to be discounted. Not taking into account these firm characteristics might wrongly attribute the observed discount to diversification. Data from the Compustat Industry Segment File from 1978 to 1996 is used to select a sample of single segment and diversifying firms. We use three alternative econometric techniques to control for the endogeneity of the diversification decision.All three methods suggest the presence of self-selection in the decision to diversify and that a negative correlation exists between firm's choice to diversify and firm value. We do a similar analysis in a sample of refocusing firms. Again, some evidence of self-selection by firms exists and we now find a positive correlation between firm's choice to refocus and firm value. Theseresults consistently suggest the importance of taking the endogeneity of the diversification status into account in analyzing its effect on firm value.
Download or read book Can Growth Opportunities Explain the Diversification Discount written by John D. Stowe and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the possibility that the diversification discount is due to differing growth opportunities between diversified and single-segment firms. We do this by comparing diversified business segments with individual single-segment same-industry firms of comparable growth opportunities. Using a sample of 230 diversifying firms from 1981 to 1997, we find a significant valuation discount in diversified firms even when we control for the difference in growth opportunities between diversified and single-segment firms. This result suggests that differing growth opportunities between diversified and single-segment firms cannot account for the diversification discount.
Download or read book Is There a Diversification Discount Diversification Payout Policy and the Value of a Firm written by Tyson B. Mackey and published by . This book was released on 2005 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Empirical studies that account for the endogeneity of the diversification decision must also account for a firm's alternative uses for its free cash flow. This study examines dividends and stock repurchases in tandem with the firm's diversification decision and finds that the factors that lead a firm to diversify also make it more likely to pay a dividend. Controlling for this relationship, the diversification premium found by recent research correcting for endogeneity turns back into a discount.
Download or read book The Diversification Discount written by and published by . This book was released on with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: What happens when the whole is worth less than the proposed sum of the parts? You've got a diversification discount, common for many unrelated diversifiers in the United States, and one that has led to many corporate breakups. If you're going to diversify, you need to do it the smart way. Learn how here.
Download or read book Finance and Strategy written by Belen Villalonga and published by Emerald Group Publishing. This book was released on 2014-09-23 with total page 392 pages. Available in PDF, EPUB and Kindle. Book excerpt: The boundaries between CEO and CFO are blurred in the fields of strategy and finance. This volume fills this gap by discussing the main subdivisions of strategy research - corporate strategy and business strategy - and the main subdivisions of finance research - corporate finance and capital markets.
Download or read book Beyond Diversification What Every Investor Needs to Know About Asset Allocation written by Sebastien Page and published by McGraw Hill Professional. This book was released on 2020-11-10 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: Generate solid, long-term profits with a portfolio allocated for your investing needs Asset allocation is the key to investing performance. Unfortunately, no single approach works perfectly—developing the right balance requires a clear-eyed look at the many models available to you, various investing methodologies, and your or your client’s level of risk tolerance. And that’s where this important guide comes in. Written by a leading allocation expert from T. Rowe Price, Beyond Diversification provides the knowledge, insights, and approaches you need to make the best allocation decisions for your goals. This deep dive into the how’s and why’s of asset allocation is organized by the three decisive components of a successfully allocated portfolio: Return Forecasting discusses the desired return investors seek. Risk Forecasting covers the level of risk investors are prepared to assume to achieve that return. Portfolio Construction calibrates the stock-bond mix that balances the risks and returns. With examples from T. Rowe Price’s asset allocation team showing you how the process works in the real world, Beyond Diversification provides everything you need to find the asset combination that will deliver the results you seek. You’ll learn how to choose the right tradeoffs, build the most effective asset allocation combination for your needs, and dramatically increase your odds of success for the long run.
