Title

Does Corporate Diversification Reduce Firm Risk? Evidence From Diversifying Acquisitions

Keywords

Acquisitions; Corporate diversification; Firm-specific risk; Systematic risk; Total risk

Abstract

The main purpose of this paper is to investigate empirically whether corporate diversification reduces the risk of the diversifying firm. We investigate this issue using a sample of diversifying acquisitions and various risk measures. We find that corporate diversification tends to decrease the risk of some firms but increase the risk of many others. On average corporate diversification does not lower firm risk. These findings call into question the notion that corporate diversification strictly reduces firm risk. © 2011 World Scientific Publishing Co. and Center for Pacific Basin Business, Economics and Finance Research.

Publication Date

9-1-2011

Publication Title

Review of Pacific Basin Financial Markets and Policies

Volume

14

Issue

3

Number of Pages

485-504

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1142/S0219091511002214

Socpus ID

80052943535 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/80052943535

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