Corporate Diversification and Performance : Evidence from Swedish Conglomerate and Non-Conglomerate Acquisitions

@inproceedings{Doukas2001CorporateDA,
  title={Corporate Diversification and Performance : Evidence from Swedish Conglomerate and Non-Conglomerate Acquisitions},
  author={John A. Doukas and Martin Holmen and Nickolaos G. Travlos},
  year={2001}
}
We study the shortand long-term valuation effects of Swedish takeovers. Using a sample of 93 bidding firms that acquired 101 targets between 1980 and 1995, we find that diversifying acquisitions lead to a negative market reaction and deterioration of the operating performance of the bidder. Announcement and performance gains in each of the three years following the acquisition occur only when bidders expand their core than their peripheral lines of business. Our findings suggest that focused… CONTINUE READING
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