Corporate Relatedness and Wealth Creation in Machinery Mergers
Corporate vertical integration and diversification strategies are fundamental topics in strategic management research. Despite an increasing recognition of the role of relatedness for wealth creation in mergers (Maksimovic and Philipps 2001; Fan and Goyal 2006), recent empirical studies (Graham, Lemmon, and Wolf 2002; Villalonga 2004) and business consulting literature (McKinsey 2004; RBSC 2005; PWC 2008) challenge the long predominating view that multi-business firms are inefficient and refresh discussion on the appropriate corporate focus of firms. We shed additional light on this discussion providing an industry-specific analysis of merger decisions of firms for various degrees of relatedness.
KeywordsAbnormal Return Event Window Wealth Creation Horizontal Merger Machinery Industry
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