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- W2171909093 abstract "This study investigates the motivations for diversification and focus strategies and the impact of these strategies on the performance and capitalization of acquirers. Using a sample of acquisitions of property-liability insurers, the study investigates the potential role of the factors underlying the decision to diversify or focus on the ultimate impact of the selected strategy. Insurers represent an attractive sample due to the extensive financial data that are available. Prior studies in this area do not control for the factors underlying the decision to diversify or focus. When we use this traditional approach, our results are consistent with prior studies. Namely, we find that diversification strategies are related to increases in the acquirers’ operating margin and overall capitalization. However, when we properly control for the factors that motivate firms to select a specific strategy, we find no relation between the focus or diversification strategy and the acquirers’ post-acquisition performance and capitalization. Our results support the view that acquirers self-select a particular diversification or focus strategy based on their needs and strengths. This suggests that it is the selection of the appropriate strategy for the right firm that enhances value rather than a specific strategy (diversification or focus) being a superior strategy for all firms. Our findings provide at least a part of the explanation for the conflicting results of prior studies concerning the relative value of diversification or focus strategies." @default.
- W2171909093 created "2016-06-24" @default.
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- W2171909093 date "2002-01-01" @default.
- W2171909093 modified "2023-09-27" @default.
- W2171909093 title "Implications of Corporate Diversification and Focus Strategies" @default.
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