Bruno Nöllgen, Bernhard Schwetzler

• We empirically iestigate the impact of diversification on a special form of corporate iestment -- corporate acquisitions. Our analysis is based on more than 30,000 firm years in a worldwide sample from 2001 to 2008. We find that conglomerates make significantly less acquisitions than stand alone _x000C_firms. This difference is particularly significant for cash rich firms. Moreover, conglomerates do not pay higher bid premia and do not perform worse in acquisitions than focused companies. Furthermore, we do not find a significant relationship between conglomerate excess value and transaction performance, suggesting that ineffi_x000E_cient internal iestment in diversified _x000C_firms is not complementary to ineffi_x000E_cient external iestment.