Using simulated mergers to evaluate corporate diversification strategies

Peter A Silhan, Howard Thomas

Research output: Contribution to journalArticle

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.

Original languageEnglish (US)
Pages (from-to)523-534
Number of pages12
JournalStrategic Management Journal
Volume7
Issue number6
DOIs
StatePublished - Jan 1 1986

Fingerprint

Mergers
Corporate diversification
Conglomerate
Diversification
Diversification strategy
Risk and return
Return on equity
Corporate performance
Forecast error
Measure of risk
Strategic risk

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

Cite this

Using simulated mergers to evaluate corporate diversification strategies. / Silhan, Peter A; Thomas, Howard.

In: Strategic Management Journal, Vol. 7, No. 6, 01.01.1986, p. 523-534.

Research output: Contribution to journalArticle

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