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Corporate mergers, stockholder diversification, and changes in systematic risk
Author(s) -
Chatterjee Sayan,
Lubatkin Michael
Publication year - 1990
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.4250110402
Subject(s) - diversification (marketing strategy) , shareholder , systematic risk , leverage (statistics) , business , financial economics , sample (material) , strategic management , industrial organization , economics , corporate governance , finance , marketing , statistics , mathematics , chemistry , chromatography
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 influence of leverage is considered. The findings highlight a performance distinction between corporate diversification and stockholder diversification in instances of related and unrelated mergers.