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| Author: | Beneish, M.D. (et al.) |
| Title: | Diversification to mitigate expropriation in the tobacco industry |
| Journal: | Journal of Financial Economics
2008 : JUL, VOL. 89:1, p. 136-157 |
| Index terms: | USA tobacco industry diversification expropriation costs |
| Freeterms: | acquisitions |
| Language: | eng |
| Abstract: | In spite of diversifying acquisitions (hereafter as: acqs.) by large, cash-rich firms destroy shareholder wealth, this paper documents positive abnormal (as: abn.) returns (as: rets.) to such acqs. in the tobacco industry. These abn. rets. are shown to be associated with proxies for lower expected expropriation (here as: exprn.) costs. It is specifically shown that wealth creation increases in the degree of domestic geographic expansion afforded by the acqs. and in the liquidity of tobacco firms' assets. Also, it is shown that the threat of exprn. constrains payments to shareholders before exprn. becomes certain in 1998. |
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