INVESTOR ASSESSMENT OF INTERNATIONAL DIVERSIFICATION: A TEST OF NON-LINEARITY

摘要

This study examines the valuation consequences of corporate diversification of U.S firms' on market-and operating-based performance, measured by security price, return and operating income (OPINC). A number of studies examined the causes and effects of international diversification on firm performance and analysts' forecast bias but the nature and form of the relationship has been largely unexplored. Since international diversification has positive and negative impacts on performance, it can be used to investigate the nature and form of the relationship between market and operating-based performance. The investigation permits an indirect test of potential value creation based on transaction such as foreign investments.