The Diversification Discount and Takeovers: Some Australian Evidence
International Journal of Managerial Finance, Forthcoming
32 Pages Posted: 3 Oct 2011
Date Written: November 1, 2010
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: Suggested Citation