The Post-Announcement Performance of Diversifying Firms

33 Pages Posted: 13 Apr 2001

See all articles by David C. Hyland

David C. Hyland

Xavier University

John David Diltz

Central Michigan University - Department of Finance and Law; University of Texas at Arlington

Date Written: April 2001

Abstract

We apply the Fama-French three factor model to returns from a sample of specialized firms that announced an economic diversifying event over the period from 1978 through 1992. In addition to full-sample results, we report results for sub-samples of firms that refocus within 60 months of the diversification announcement, as well as for firms that were acquired, and firms that experienced financial distress. Finally, we compare long-run monthly post-announcement returns to pre-announcement returns. We find mixed evidence, with positive immediate impacts and only weak indications of negative long-run consequences.

Keywords: Diversification, merger, acquisition, valuation

JEL Classification: G30, G32, G34

Suggested Citation

Hyland, David C. and Diltz, John David, The Post-Announcement Performance of Diversifying Firms (April 2001). Available at SSRN: https://ssrn.com/abstract=266682 or http://dx.doi.org/10.2139/ssrn.266682

David C. Hyland (Contact Author)

Xavier University ( email )

Cincinnati, OH 45207

John David Diltz

Central Michigan University - Department of Finance and Law ( email )

Mount Pleasant, MI 48859
United States

University of Texas at Arlington ( email )

Box 19449
Arlington, TX 76013
United States
817-272-3837 (Phone)

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