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http://hdl.handle.net/2451/26853
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| Title: | Causes and Effects of Corporate Refocusing Programs |
| Authors: | Berger, Philip G.
Ofek, Eli |
| Issue Date: | Aug-1997 |
| Series/Report no.: | FIN-98-008 |
| Abstract: | We study the precursors and outcomes of refocusing episodes by
diversified firms that were not taken over. Those that refocus have more
value-reducing diversification policies than those not refocusing. Major
disciplinary or incentive-altering events (including management
turnover, outside shareholder pressure, changes in management
compensation, and financial distress) usually must occur, however,
before managers refocus. Consistent with divestitures reversing, at
least in part, value destruction from unsuccessful diversification
strategies, the cumulative abnormal returns over a firm's
refocusing-related announcements average 7.3%, and are significantly
related to the amount of value-reduction associated with the refocuser's
diversification policy. |
| URI: | http://hdl.handle.net/2451/26853 |
| Appears in Collections: | Economics Working Papers
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