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The Diversification Discount and Takeovers: Some Australian Evidence

International Journal of Managerial Finance, Forthcoming

32 Pages Posted: 3 Oct 2011  

Michael Nankervis

National Australia Bank (NAB)

Harminder Singh

Deakin University - School of Accounting, Economics and Finance

Date Written: November 1, 2010

Abstract

This paper examines the existence of a diversification discount in the Australian takeover market. A sample of 446 Australian publicly-listed firms involved in the market for corporate control was observed between 2000 and 2007. We examine two pre-announcement and four post-announcement periods, predominantly around the immediate event date, but also examine activity out to one year following the announcement. Our results failed to confirm the existence of a diversification discount when controlling for commonly analysed deal characteristics. When the payment of takeovers has been combined, the takeovers in the diversified segment fared better than in the non-diversified segment, which is contrary to diversification discount phenomena.

Keywords: Diversification, Takeovers

JEL Classification: G32, G34

Suggested Citation

Nankervis, Michael and Singh, Harminder, The Diversification Discount and Takeovers: Some Australian Evidence (November 1, 2010). International Journal of Managerial Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1937961

Michael Nankervis

National Australia Bank (NAB) ( email )

Australia

Harminder Singh (Contact Author)

Deakin University - School of Accounting, Economics and Finance ( email )

221 Burwood Highway
Burwood, Victoria 3215
Australia

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