Growth Opportunity and Diversifying Announcement Effect

• Main Authors: Chia-Ling Chen, 陳佳玲
• Other Authors: Jeng-Ren Chiou
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/28571409798775316144

碩士 === 國立成功大學 === 財務金融研究所 === 95 === This paper is the first mover to examine the effect of firm growth opportunity on market reactions of diversifying decision. Using a sample of 64 diversifying events in U.S. spanning from 1996 to 2002, the results show that the firms with high growth opportunities have significantly positive announcement abnormal returns, and however the firms with low growth opportunities have negative announcement returns. After taking into account other factors affecting diversifying announcement returns, the significant positive relationship between growth opportunity and announcement returns still hold. Besides, we find firm size and profitability are both significant determinants of diversifying returns.