Chulalongkorn University Theses and Dissertations (Chula ETD)

Year (A.D.)


Document Type

Independent Study

First Advisor

Manapol Ekkayokkaya


Faculty of Commerce and Accountancy (คณะพาณิชยศาสตร์และการบัญชี)

Department (if any)

Department of Banking and Finance (ภาควิชาการธนาคารและการเงิน)

Degree Name

Master of Science

Degree Level

Master's Degree

Degree Discipline





This study examines risk effect in conglomerate acquisitions through portfolio diversification framework. We find that based on asset diversification potential, acquirers’ risks are expected to decline when they engage in diversifying acquisitions. Interestingly, our result suggests that focus acquisitions are also associated with firms’ risk decrease. With this finding, it indicates that asset diversification potential is also pronounced even when the two assets, i.e., firms from similar industry are combined together. In addition, our results suggest that risks are expected to decline more when diversified firms make further diversifying acquisitions than focus acquisitions but this evidence could not be observed when acquirers are single- segment firms before acquisition. By using our ex ante risk measure as a proxy for risk reduction attempt by managers, we find empirical evidence to support that risk reduction in conglomerate acquisitions could be driven by shareholders’ value maximization motive rather than agency driven motive. Our results show a significantly positive association between announcement excess returns accruing to bidders’ shareholders and the extent of risk reduction attempt. This relation holds only in subsample of diversifying deals implying that this wealth creation motive is unique only to diversifying type of acquisition.



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