Diversification Strategy, Accounting Determined Risk, and Accounting Determined Return

Bettis, Richard A.; Hall, William K.

doi:10.5465/255989

Cited by 38 publications

(43 citation statements)

References 2 publications

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“…Other authors treat M&A the same way (e. g. Gugler et al 2003). 5 Rumelt's typology includes the major categories: dominant business, related constrained, related linked and unrelated (conglomerate) businesses and has been applied in various studies Baysinger and Hoskisson 1989, Bettis and Hall 1982 For example, Datta et al (1991) review the literature on diversification and find inconclusive evidence. Palich et al (2000) conduct a meta-study and establish an inverted U-curve, i. e. diversification is profitable when a firm has been a single business firm and then diversifies into related businesses.…”

Section: Literature Review and Research Frameworkmentioning

confidence: 99%

“…Business Relatedness is commonly assessed in four different ways: (1) objective measures of relatedness by computing a diversification index based on the 2 and 4-digit SIC code of the companies, (2) refinement of these measures by including an entropy index and a HerfindahlIndex according to Palepu (1985), (3) qualitative approaches for classification as proposed by Rumelt (1974), Porter (1985) and Bettis and Hall (1982), or (4) subjective measures of relatedness based on surveys or expert judgments.…”

Section: Operationalization Of Relatednessmentioning

confidence: 99%

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Do synergies exist in related acquisitions? A meta-analysis of acquisition studies

2009

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Section: Literature Review and Research Frameworkmentioning

confidence: 99%

Section: Operationalization Of Relatednessmentioning

confidence: 99%

Do synergies exist in related acquisitions? A meta-analysis of acquisition studies

2009

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“…Moreover, it is noteworthy that the sample contains firms across all industries, except financial services. Results need to be carefully assessed, since differences exist between industries, especially relating to the measured degree of matches of SIC (Bettis and Hall 1982).…”

Section: Limitations and Outlookmentioning

confidence: 99%

Lost in transaction? The transfer effect of strategic consistency

Fehre

Kronenwett

Lindstädt

et al. 2015

Bus Res

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Prior empirical studies provide evidence that the learning-curve perspective from manufacturing settings is not directly applicable to strategic management settings. In the latter case learning relates to the quality rather than to the quantity of experience. Regarding the antecedents of organizational learning especially, there are still unanswered questions remaining; for example, the questions what kind of experience has a positive effect on performance and what kind of experience is more of a hindrance than a help. This becomes obvious when looking at acquisitions as examples of strategic management decisions. Results of prior empirical studies analyzing the relationship of acquisition experience and acquisition performance have been mixed. By introducing the concept of strategic consistency, we intend to facilitate a better understanding of the kind of experience necessary for organizational learning. Therefore, we measure the concordance and frequency of change in strategic actions. Employing a sample of 379 acquisition series, we find evidence for a positive transfer effect of strategic consistency within series and, therefore, a positive relationship between strategic consistency and acquisition performance.

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“…The synergy created by related mergers, therefore, 'is likely to affect the individual earnings streams, which in turn non-trivially affect the determination of beta' (Michel and Shaked, 1984: 18). First, related mergers provide opportunities to reduce cost and/or enhance differentiation through exploiting scale and scope economies in such tangible areas as manufacturing, research, and distribution (Salter and Weinhold, 1979;Lubatkin, 1983), and in such intangible areas as administrative 'know-how' (Bettis and Hall, 1982;Porter, 1985) and brand extension (Singh and Montgomery, 1987). Second, related mergers provide the potential for collusive gains (monopoly power) if by becoming larger, the merged firm can influence the price of its output or the cost of its inputs (Chatterjee, 1986).…”

Section: Related Mergers Are More Synergisticmentioning

confidence: 99%

Corporate mergers, stockholder diversification, and changes in systematic risk

Chatterjee

Lubatkin

1990

Strategic Management Journal

125

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LJ^A Strategic management literature suggests a relationship between systematic risk and the relatedness of merging firms. This is tested for a sample of 120 large mergers by controlling for the systematic risk of the target firm, correcting for possible problems of heteroskedasticity, and estimating shifts in risk over daily as well as monthly time horizons. Finally, the infiuence of leverage is considered. The findings highlight a performance distinction between corporate diversification and stockholder diversification in instances of related and unrelated mergers.

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Diversification Strategy, Accounting Determined Risk, and Accounting Determined Return

Cited by 38 publications

References 2 publications

Do synergies exist in related acquisitions? A meta-analysis of acquisition studies

Do synergies exist in related acquisitions? A meta-analysis of acquisition studies

Lost in transaction? The transfer effect of strategic consistency

Corporate mergers, stockholder diversification, and changes in systematic risk

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