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Title:

The cost of capital effect of M&A transactions: Disentangling coinsurance from the diversification discount

Document type:
Zeitschriftenaufsatz
Author(s):
Bielstein, Patrick; Fischer, Mario; Kaserer, Christoph
Non-TUM Co-author(s):
ja
Cooperation:
international
Abstract:
This study argues that in corporate diversification there is a bright side (coinsurance effect) and a dark side (diversifi- cation discount). While diversification might reduce systematic risk by its impact on the cost of financial distress, it might increase systematic risk because of inefficient cross-subsidization at the same time. Building on a theoretical model, we analyze mergers and acquisitions in the US over the period 1985 to 2014. We find the coinsurance effect to decrease the cost of...     »
Keywords:
corporate diversification, cost of capital, internal capital markets, M&A transactions
Intellectual Contribution:
Discipline-based Research
Journal title:
European Financial Management
Journal listet in FT50 ranking:
nein
Year:
2018
Journal volume:
24
Journal issue:
4
Pages contribution:
650-679
Fulltext / DOI:
doi:10.1111/eufm.1217
Judgement review:
0
Key publication:
Nein
Peer reviewed:
Ja
International:
Ja
Book review:
Nein
Commissioned:
not commissioned
Professional Journal:
Nein
Technology:
Nein
Interdisciplinarity:
Nein
Mission statement:
;
Ethics and Sustainability:
Nein
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