Journal of Asset Management

, Volume 20, Issue 1, pp 31–37 | Cite as

Corporate diversification and abnormal returns

  • Chris M. LawreyEmail author
  • Brandon C. L. Morris
Original Article


We examine the effect of corporate diversification by comparing abnormal returns between portfolios of diversified firms and focused firms. Our study covers US firms for the years 1976–2009 and compares abnormal returns over 12, 24, and 36-month windows. Initial univariate tests show mixed results, though after we control for firm, industry, and time effects, we find convincing evidence that diversified-firm portfolios outperform focused-firm portfolios over the 3-year term. Our findings indicate that the benefits of corporate diversification are captured over longer investing horizons.


Corporate finance Diversification Abnormal returns 

JEL Classification

G10 G11 G12 


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Copyright information

© Springer Nature Limited 2018

Authors and Affiliations

  1. 1.Department of Economics and Finance, Mitchell College of BusinessUniversity of South AlabamaMobileUSA
  2. 2.Department of Finance and Financial ServicesWright State UniversityDaytonUSA

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