Were the acquisitive conglomerates inefficient?

• 成果类型: Article
• 署名作者: Klein, PG
• 署名单位: University System of Georgia; University of Georgia
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.2307/2696391
• 发表日期: 2001
• 页码: 745-761
• 关键词: internal capital-markets; investment opportunity set; free cash flow; corporate diversification; tobin-q; takeovers; dividend; strategy; focus

摘要

This article challenges the conventional wisdom that the 1960s conglomerates were inefficient. I offer valuation results consistent with recent event-study evidence that markets typically rewarded diversifying acquisitions. Using new data, 1 compute industry-adjusted valuation, profitability, leverage, and investment ratios for 36 large, acquisitive conglomerates from 1966 to 1974. During the early 1970s, the conglomerates were less valuable and less profitable than stand-alone firms, favoring an agency explanation for unrelated diversification. In the 1960s, however conglomerates were not valued at a discount. Evidence from acquisition histories suggests that conglomerate diversification may have added value by creating internal capital markets.