Title

Using simulated mergers to evaluate corporate diversification strategies

Publication Type

Journal Article

Publication Date

1986

Abstract

This study suggests that simulated mergers can be used to help evaluate the effects of diversification on corporate performance. The results, which are consistent with a risk-reduction motive for conglomerate diversification, imply that conglomerate strategies focused on fewer and larger units may be advantageous in terms of certain measures of risk and return. Forecast error is used here to measure strategic risk, and return on equity is used to measure return.

Discipline

Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Strategic Management Journal

Volume

7

Issue

6

First Page

523

Last Page

534

ISSN

0143-2095

Identifier

10.1002/smj.4250070604

Publisher

Wiley

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