New evidence on value and profitability effect using common analysts –method for defining peer firms
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School of Business |
Master's thesis
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Authors
Date
2019
Department
Major/Subject
Mcode
Degree programme
Finance
Language
en
Pages
57 + 5
Series
Abstract
I study the effects of different diversification strategies on firm excess value and profitability in Nordics between 2012 and 2018. I challenge the common methods used in prior literature and utilize a novel common analyst – method to define peer firms created by Kaustia and Rantala (2018). My results show that there seems to be a significant diversification discount for related and unrelated diversification strategies in Nordics when compared to focused peer groups simulated by the common analyst -method. I also show that the source for the diversification discount is the worse operational profitability in these diversification strategies compared to the focused peers.Description
Thesis advisor
Puttonen, VesaKeywords
diversification strategy, diversification discount, profitability, peer group