Corporate diversification, refocusing and shareholder voting

Yerzhan Tokbolat; Hang Le; Steve Thompson

doi:10.1016/j.irfa.2021.101924

Corporate diversification, refocusing and shareholder voting

Yerzhan Tokbolat, Hang Le, Steve Thompson

Queen's Business School (QBS)

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Abstract

We examine if shareholders' attitude towards firm diversification strategy is revealed in their votes on management-initiated acquisition and divestment proposals using data on voting by shareholders of UK public firms between 1997 and 2019. We find that voting dissent is higher for diversifying acquisitions and lower for refocusing divestments, especially when these involve diversified firms. We also find a negative relationship between diversification premium and voting dissent. Our results provide evidence that diversification characteristics of firms and deals have a significant impact on shareholders' dissent in acquisitions and divestments.

Original language	English
Article number	101924
Journal	International Review of Financial Analysis
Volume	78C
Early online date	29 Oct 2021
DOIs	https://doi.org/10.1016/j.irfa.2021.101924
Publication status	Published - Nov 2021

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Corporate diversification, refocusing and shareholder voting
Copyright 2021 Elsevier. This manuscript is distributed under a Creative Commons Attribution-NonCommercial-NoDerivs License (https://creativecommons.org/licenses/by-nc-nd/4.0/), which permits distribution and reproduction for non-commercial purposes, provided the author and source are cited.
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abstract = "We examine if shareholders' attitude towards firm diversification strategy is revealed in their votes on management-initiated acquisition and divestment proposals using data on voting by shareholders of UK public firms between 1997 and 2019. We find that voting dissent is higher for diversifying acquisitions and lower for refocusing divestments, especially when these involve diversified firms. We also find a negative relationship between diversification premium and voting dissent. Our results provide evidence that diversification characteristics of firms and deals have a significant impact on shareholders' dissent in acquisitions and divestments.",

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AB - We examine if shareholders' attitude towards firm diversification strategy is revealed in their votes on management-initiated acquisition and divestment proposals using data on voting by shareholders of UK public firms between 1997 and 2019. We find that voting dissent is higher for diversifying acquisitions and lower for refocusing divestments, especially when these involve diversified firms. We also find a negative relationship between diversification premium and voting dissent. Our results provide evidence that diversification characteristics of firms and deals have a significant impact on shareholders' dissent in acquisitions and divestments.

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Corporate diversification, refocusing and shareholder voting

Abstract

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