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The impact of industrial diversification on corporate transactions

  • This doctoral thesis consists of three articles: one literature overview and two empirical articles. The first article provides a literature overview about industrial diversification, corporate acquisitions and the intersection of both research areas. This thesis secondly analyzes whether conglomerates iest externally differently from focused firms. This iestigation provides new insights on the question how industrial diversification influences corporate iestment. It allows to draw conclusions whether internal iestment is independent from external iestment in diversified firms, or whether weak internal iestment in conglomerates is (at least partially) offset by more efficient external iestment, or even whether value-destructive internal iestment is accompanied by external iestment eliciting the same effects. In this case weakly managed multi-segment firms could be also identified by their behavior and success in corporate acquisitions. Third, the thesis copes with the question how conglomerates are perceived and treated as potential targets of corporate acquisitions. This analysis adds further aspects to the question whether multi-segment firms are discounted due to their organizational form. Assuming that the sum of the single segment of a diversified company is higher valued than the conglomerate as a whole, one could expect that iestors should strive to acquire such companies, to dismantle them subsequently in order to create additional value by reshaping these inefficiently composed entities. However, there are also contradicting effects of lower synergies and higher integration costs compared to the acquisition of stand alone firms. New insights in these discussions allow us to draw conclusions whether a diversification discount potentially being harvested by a bust up takeover outweighs lower synergies and higher integration costs.

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Document Type:Doctoral Thesis
Author:Bruno Nöllgen
Chairs and Professorships:Chair of Financial Management
Full text/ URN:urn:nbn:de:bsz:14-qucosa-135589
Year of Completion:2014
Leipzig: HHL Leipzig Graduate School of Management, 2014 Diss., HHL Leipzig Graduate School of Management, 2014