Abstract

http://ssrn.com/abstract=140414
 
 

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Causes and Effects of Corporate Refocusing


Philip G. Berger


University of Chicago - Booth School of Business

Eli Ofek


New York University (NYU) - Department of Finance


Review of Financial Studies, Vol. 12, Issue 2

Abstract:     
We study the precursors and outcomes of refocusing episodes by 107 diversified firms that were not taken over between 1984 and 1993. These firms had more value-reducing diversification policies than diversified firms that did not refocus. However, major disciplinary or incentive-altering events (including management turnover, outside shareholder pressure, changes in management compensation, and financial distress) usually occurred before refocusing took place. The cumulative abnormal returns over a firm's refocusing-related announcements averaged 7.3%, and were significantly related to the amount of value-reduction associated with the refocuser's diversification policy.

JEL Classification: G31, G32

Accepted Paper Series


Not Available For Download

Date posted: December 8, 1998  

Suggested Citation

Berger, Philip G. and Ofek, Eli, Causes and Effects of Corporate Refocusing. Review of Financial Studies, Vol. 12, Issue 2. Available at SSRN: http://ssrn.com/abstract=140414

Contact Information

Philip G. Berger (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-8687 (Phone)
773-834-4585 (Fax)
Eli Ofek
New York University (NYU) - Department of Finance ( email )
Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States
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