Dissecting Conglomerates

 

 

Speaker: Ran Duchin, University of Washington

 

We develop a new method to estimate Tobin's qs of conglomerate divisions without relying on standalone firms.  Divisional qs differ considerably from qs of standalone firms and, consistent with theories of corporate diversification, are less volatile and less sensitive to macroeconomic shocks. In contrast to prior evidence based on standalone qs, divisional investment is highly sensitive to divisional qs. This sensitivity disappears after a division is spun-off into a standalone firm. Moreover, divisional qs predict both the volume and announcement returns of diversifying acquisitions. Overall, our estimates provide new opportunities to study conglomeration and internal capital allocation.

 

Time: 12.00 – 1.00 p.m.

Venue: University of Technology, Sydney

               Building 8, Room 8.002, Dr Chau Chak Wing Building
               Dr Chau Chak Wing Building

              14 - 28 Ultimo Road, Ultimo

 

 

Enquiries: Mala Kapahi (Ph: +61 2 9514 7777)