Economic gains around mergers and acquisitions in the construction industry of the United States of America

2004 ◽  
Vol 31 (3) ◽  
pp. 513-525 ◽  
Author(s):  
Jongsoo Choi ◽  
Jeffrey S Russell
Keyword(s):  
Mergers And Acquisitions ◽  
Construction Industry ◽  
The United States ◽  
Equity Market ◽  
Market Returns ◽  
Diversification Strategy ◽  
Unrelated Diversification ◽  
Related Diversification ◽  
Research Findings ◽  
And Performance

As waves of mergers and acquisitions (M&A) have swept over American industrial business organizations, construction firms have been caught in the middle of the resulting turbulence. Nonetheless, no research has investigated these significant events in the construction industry. Built upon the financial theories and methodology, the overall success level of construction M&A transactions was assessed. The research findings, which were drawn from an analysis of 171 construction M&A transactions, indicate that the performance of construction M&A was positive at an insignificant level, as measured by equity market returns. Whereas the relationship between the type of diversification strategy and performance indicates that while the related diversification strategy has been slightly favored by both theories and empirical research findings over unrelated diversification, no significant performance difference was observed between two diversification strategies.Key words: mergers and acquisitions, diversification strategy, equity market returns.

Post-operating performance of construction mergers and acquisitions of the United States of America

2006 ◽  
Vol 33 (3) ◽  
pp. 266-277 ◽  
Author(s):  
Jongsoo Choi ◽  
Donald Harmatuck
Keyword(s):  
United States ◽  
Stock Market ◽  
Mergers And Acquisitions ◽  
Construction Industry ◽  
United States Of America ◽  
Operating Performance ◽  
The United States ◽  
Market Returns ◽  
Stock Market Returns ◽  
Research Outcomes

A previous study assessed stock market returns (ex ante expectations), and this study examines the actual operating performance (ex post-operating performances) of the mergers and acquisitions (M&A) observed during the past two decades (1980-2002) in the construction industry in the United States of America. Utilizing various statistical tools and longitudinal data analysis modeling techniques, three hypotheses were tested. First, the level of synergistic gains, measured as operating cash flow returns, was not improved significantly after firm integration. Second, regarding the management wealth maximization hypothesis, the size of firms dramatically increased after the integration of the firms, and the operating performance was slightly improved compared with that before the event. Research outcomes also indicated that the previous research findings concerning stock market returns on M&A were consistent with the long-term operating performance, and thus supported the market efficiency hypothesis. Lastly, M&A guidelines for the construction industry are presented based on the research outcomes from both stock market return and operating performance analysis. Key words: mergers and acquisitions, diversification strategy, operating performance.

scholarly journals Pengaruh Risiko Bisnis, Life Cycle Dan Diversifikasi Terhadap Struktur Modal Serta Hubungannya Dengan Nilai Perusahaan Manufaktur Di Indonesia

2016 ◽  
Vol 9 (1) ◽  
Author(s):  
Septi Diana Sari
Keyword(s):  
Life Cycle ◽  
Capital Structure ◽  
Firm Value ◽  
Order Theory ◽  
Diversification Strategy ◽  
Single Segment ◽  
Unrelated Diversification ◽  
Related Diversification ◽  
Positive Effect ◽  
The Capital Structure

This study aims to examine the factors that affect the capital structure. The task of the financial manager is to determine the amount of capital structure to enhance shareholder value. Since the capital structure associated with firm value , this study also aimed to examine the effect of capital structure on firm value by considering the company's diversification strategy and corporate life cycle stages . By using the data obtained from the OSIRIS period 2009-2012, researchers used multiple regression test and path analysis to test the hypothesis. From the test results stated that only companies which are in the start-up phase which has a significant positive effect on the capital structure , as well as the diversification strategy has an influence on the capital structure of the company's capital structure with a sequence of related diversification > unrelated diversification > single segment. But when regressed diversification strategy with corporate values, only a single segment strategy and related diversification which significantly affect the value of the company, as well as the positive effect of capital structure on firm value. Most of the results of this study can be explained by the signaling effect and the pecking order theory. 

Corporate or Product Diversification

2017 ◽  
Author(s):  
Margarethe F. Wiersema ◽  
Joseph B. Beck
Keyword(s):  
Distribution Channels ◽  
Shareholder Wealth ◽  
Product Diversification ◽  
Strategic Decision ◽  
Business Trend ◽  
Corporate Diversification ◽  
Diversification Strategy ◽  
Unrelated Diversification ◽  
Strategic Assets ◽  
Related Diversification

Corporate or product diversification represents a strategic decision. Specifically, it addresses the strategic question regarding in which businesses the firm will compete. A single-business company that expands its strategic scope by adding new businesses becomes a diversified, multibusiness company. The means by which a company expands its strategic scope is by acquiring businesses, investing in the development of new businesses, or both. Similarly, an already diversified firm can reduce its strategic scope by divesting from or closing businesses. There are two fundamentally different types of corporate diversification strategy, depending on the interrelatedness of the businesses in the company’s portfolio: related diversification and unrelated diversification. Related diversification occurs when the businesses in the company’s portfolio share strategic assets or resources, such as technology, a brand name, or distribution channels. Unrelated diversification occurs when a company’s businesses do not share strategic assets or resources and do not have interrelationships of strategic importance. Companies can pursue both types of diversification simultaneously, and thus have a portfolio of businesses both related and unrelated. In addition to variations in the type of diversification, companies can vary in the extent of their diversification, ranging from business portfolios with very limited diversification to highly diversified portfolios. Decisions regarding the diversification strategy of a firm represent major strategic scope decisions since they impact the markets and industries in which the company will compete. Companies can increase or reduce their level of diversification for a variety of reasons. Economic motives, for example, include the pursuit of economies of multiproduct scale and scope, whereby per-unit costs may be lowered through the increase in sales volume or other fixed-cost reducing benefits associated with growth through diversification. In addition, companies may diversify for strategic reasons, such as enhancement of capabilities or superior competitive positioning through entry into new product markets. Similarly, economic and strategic reasons can motivate the firm to refocus and reduce its level of diversification when the strategic and economic rationales for being in a particular business are no longer justified. The performance consequences of corporate diversification can vary, depending on both the extent of the firm’s diversification and the type of diversification. In general, research indicates that high levels of diversification are value-destroying due to the integrative and complexity-associated costs that administering an extremely diversified portfolio imposes on management. Nevertheless, related diversification, where the company shares underlying resources across its business portfolio (e.g., brand, technology, and distribution channels), can lead to higher levels of performance than can unrelated diversification, due to the potential for enhanced profitability from leveraging shared resources. Corporate diversification was a major U.S. business trend in the 1960s. During the 1980s, however, pressure from the capital market for shareholder wealth maximization led to the adoption of strategies whereby many companies refocused their business portfolios and thus reduced their levels of corporate diversification by divesting unrelated businesses in order to concentrate on their predominant or core business.

scholarly journals Symmetric Modeling of Diversification Strategy and Organizational Structure on Financial Performance: Evidence from China

Symmetry ◽  
2021 ◽  
Vol 13 (2) ◽  
pp. 196
Author(s):  
Jianwei Cao ◽  
Cisheng Wu ◽  
Stephen Tetteh ◽  
Hui Guang ◽  
Gendi Miao
Keyword(s):  
Organizational Structure ◽  
Financial Performance ◽  
Structure Design ◽  
Symmetric Model ◽  
Moderating Effects ◽  
Diversification Strategy ◽  
Holding Company ◽  
Unrelated Diversification ◽  
Diversification Strategies ◽  
Related Diversification

Diversification is a strategy adopted by many enterprises in the process of expansion. The success of the diversification of an enterprise mainly depends on the choice and implement of strategy; choosing an organizational structure that fits the type of diversification strategy used is fundamental to improving financial performance. Based on the empirical research method, this study establishes a symmetric model of diversification strategy and organizational structure on financial performance and selects data from 613 A-share-listed companies in China, from 2012 to 2016, to test the impacts of unrelated and related diversification strategies on financial performance, as well as the moderating effects of united company, holding company, and multidivisional structures on such relationships. The results show that there is asymmetry between the diversification strategy adopted and financial performance, and a related diversification strategy should be adopted as a priority; the symmetry of an unrelated diversification strategy and holding company structure on financial performance is partially confirmed, and other elements should be adopted, simultaneously, to improve this symmetry; a related diversification strategy and multidivisional structure on financial performance is symmetric. The above findings will provide references for the diversification strategy choice and the organizational structure design of enterprises.

scholarly journals Do Industry Specialist Auditors Add Value in Mergers and Acquisitions?

2015 ◽  
Vol 31 (4) ◽  
pp. 1245 ◽  
Author(s):  
Ho-Young Lee ◽  
Vivek Mande ◽  
Jong Chool Park
Keyword(s):  
Stock Market ◽  
Mergers And Acquisitions ◽  
Abnormal Returns ◽  
Financial Statements ◽  
The United States ◽  
Market Returns ◽  
Stock Market Returns ◽  
Audit Firm ◽  
External Auditors ◽  
Acquiring Firms

This study examines whether the stock market returns surrounding announcements of mergers and acquisitions (M&A) are higher for acquiring firms audited by industry specialists. External auditors are uniquely positioned to provide assurance on the financial statements of their acquiring clients both before and after an acquisition. Also, an important aspect of due diligence in M&A transactions is the external auditors review of the accounting records, financial statements, internal controls and information systems of the target company. Using a sample of 4,283 M&A announcements between 1988 and 2011 in the United States of America, we report the results from our main regressions, controlling for all the bidder traits and deal characteristics. We examine incremental effect of audit firm specialization on cumulative abnormal returns. We also measure the effect of audit firm industry specialization in a reduced sample of 3,946 acquisitions after removing all non-Big N auditors. We use Heckmans (1979) two-step procedure to ensure that announcement period return to the size of the audit firm is not driven by the determinants related to auditor choice. Consistent with the idea that industry specialists provide higher quality assurance and possibly superior M&A advisory services, we find that the stock market returns are higher when acquiring firms are audited by industry specialists.

scholarly journals Analyzing Risks And Returns In Emerging Equity Markets

2011 ◽  
Vol 5 (8) ◽  
Author(s):  
Peter Went
Keyword(s):  
Operations Research ◽  
Risk Measures ◽  
Equity Market ◽  
Data Envelopment ◽  
Font Size ◽  
Market Returns ◽  
Risk Characteristics ◽  
And Performance ◽  
Mean Variance ◽  
Portfolio Return

<p class="MsoNormal" style="text-align: justify; margin: 0in 34.2pt 0pt 0.5in;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">This study applies an operations research technique, Data Envelopment Analysis (DEA) on emerging equity market returns.<span style="mso-spacerun: yes;">&nbsp; </span>Sharpe and Treynor measures focus only one risk aspect of portfolio return and in reality investors consider several alternative risk measures outside the traditional mean-variance framework.<span style="mso-spacerun: yes;">&nbsp; </span>DEA is a multivariate approach that can incorporate multiple risk characteristics that may be equally important for the investor&rsquo;s decision to allocate assets to emerging markets, the risk and performance relationships are explored in a multivariate framework. </span></span><strong style="mso-bidi-font-weight: normal;"><span style="font-size: 10pt; mso-fareast-font-family: Batang;"></span></strong></p>

scholarly journals Empirical Examination on the Drivers of the U.S. Equity Returns in the During the COVID-19 Crisis

2021 ◽  
Vol 9 ◽  
Author(s):  
Qing Wang ◽  
Mo Bai ◽  
Mai Huang
Keyword(s):  
The United States ◽  
Equity Market ◽  
Ordinary Least Squares ◽  
Equity Returns ◽  
Market Returns ◽  
Empirical Examination ◽  
Stock Market Returns ◽  
United States Dollar ◽  
Least Angle Regression ◽  
The U.S

This study investigates the drivers of the Standard &amp; Poor's (S&amp;P) 500 equity returns during the COVID-19 crisis era. The paper considers various determinants of the equity returns from December 31, 2019, to February 19, 2021. It is observed that the United States Dollar (USD) and the volatility indices (VIX) negatively affect the S&amp;P 500 equity returns. However, the newspaper-based infectious disease “equity market volatility tracker” is positively associated with the stock market returns. These results are robust to consider both the ordinary least squares (OLS) and the least angle regression (LARS) estimators.

The moderating effect of board size on the relationship between diversification and tourism firm performance

2019 ◽  
Vol 25 (7) ◽  
pp. 1084-1104 ◽  
Author(s):  
Chen Zheng ◽  
Henry Tsai
Keyword(s):  
Firm Performance ◽  
Tourism Industry ◽  
Moderating Effect ◽  
Diversification Strategy ◽  
Board Size ◽  
Unrelated Diversification ◽  
Diversification Strategies ◽  
Related Diversification ◽  
The Relationship

This study examines the effects of diversification strategy and board size on firm performance as well as the moderating effect of board size on the relationship between diversification strategy and firm performance in the Chinese tourism industry from 2008 to 2015. The results show that related diversification positively influenced Chinese tourism firm performance, and unrelated diversification negatively influenced it. Board size was found to negatively moderate the relationship between related diversification and firm performance and to positively moderate the relationship between unrelated diversification and firm performance. In addition, the results imply that small boards are beneficial to Chinese tourism firms when both related and unrelated diversification strategies are implemented.

scholarly journals Issues of construction health and safety in developing countries: a case of Jordan

2013 ◽  
Vol 13 (3) ◽  
pp. 141-156 ◽  
Author(s):  
Suhair Zaid Alkilani ◽  
Julie Jupp ◽  
Anil Sawhney
Keyword(s):  
Developing Countries ◽  
Construction Industry ◽  
Health And Safety ◽  
Secondary Data ◽  
Research Literature ◽  
Construction Sites ◽  
Current State ◽  
Research Findings ◽  
Legal Constraints ◽  
And Performance

The construction industry is widely regarded as one of the most significant interms of its impact on health and safety (H&S). Recent findings suggestthat in developing countries H&S awareness and performance is low. In this paper,the current state of H&S on construction sites in Jordan was explored usinga two-part investigation. The first part introduces the area of research in aliterature based study of on-site safety. The second part is a case study onthe Jordanian construction industry and its current H&S practices. Primary datawas collected from field visits, expert interviews and semi-structuredquestionnaires. Supporting secondary data was collected from archival studiesand related research literature. The research findings highlight a lack of governmentcommitment exemplified by regulations, policies and legal constraints thatlimit the operational efficiency of those government departments responsiblefor H&S management, and hindering the development of good H&S practice.Research results also highlight the key constraints of good H&S practice fromthe perspective of construction contractors.The study concludes with discussion ofpotential solutions toimprove H&S performance on construction sites in Jordan.

Undesirable Effects of Goal Setting on Perceived Fairness, Commitment, and Unethical Behavior

2018 ◽  
Vol 62 (2) ◽  
pp. 97-107 ◽  
Author(s):  
Nina Keith
Keyword(s):  
Goal Setting ◽  
Unethical Behavior ◽  
The United States ◽  
Goal Commitment ◽  
Management Technique ◽  
Long Term Effects ◽  
Perceived Fairness ◽  
Negative Effects ◽  
Positive Effects ◽  
And Performance

Abstract. The positive effects of goal setting on motivation and performance are among the most established findings of industrial–organizational psychology. Accordingly, goal setting is a common management technique. Lately, however, potential negative effects of goal-setting, for example, on unethical behavior, are increasingly being discussed. This research replicates and extends a laboratory experiment conducted in the United States. In one of three goal conditions (do-your-best goals, consistently high goals, increasingly high goals), 101 participants worked on a search task in five rounds. Half of them (transparency yes/no) were informed at the outset about goal development. We did not find the expected effects on unethical behavior but medium-to-large effects on subjective variables: Perceived fairness of goals and goal commitment were least favorable in the increasing-goal condition, particularly in later goal rounds. Results indicate that when designing goal-setting interventions, organizations may consider potential undesirable long-term effects.

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