This paper studies announcement returns in a sample of 3,667 mergers over the last 55 years in order to shed light on the causes of the waning of corporate diversification. The abnormal combined (acquirer + target) return from diversifying mergers declined over time, consistent with the idea...

This paper studies the announcement returns associated with diversifying mergers from 1950 to 2002. It is widely believed that corporate diversification destroys value, but we find that combined (acquirer + target) announcement returns were significantly positive for diversifying mergers...

This paper studies the announcement returns from 4,764 mergers over the last 57 years in order to shed light on the causes of corporate diversification. One prominent view is that diversification is value destroying, either because of agency problems or internal investment distortions, but we...