Corporate Diversification-Performance Puzzle in BRIC
Researchers have long tried to define the impact of corporate diversification on firm value. Academic papers mainly concentrate on the effects of corporate diversification in mature markets while its consequences in emerging capital markets are less explored. This article presents the results of an empirical analysis of corporate diversification strategies of a sample of companies from BRIC countries that expanded via acquisitions during 2000–2013. We contribute to the existing literature by examining the effects of corporate diversification on firm value during the pre- and post-crisis periods. In line with other studies, we distinguish between related and unrelated diversification and in contrast to them we single out and separately analyze horizontal, conglomerate and vertical acquisitions. Based on a sample of 319 deals initiated by companies from BRIC countries, we found positive (3.32% and 9.01%) and statistically significant cumulative abnormal returns for conglomerate acquisitions during the pre- and post-crisis periods, correspondingly. We also found that the market reacts positively and statistically significant to the announcements of horizontal and vertical integration only during the pre-crisis period.
The industrial development of emerging markets has been a powerful driver for mergers and acquisitions. The contributions collected in this book assess major M&A deals in the largest emerging capital markets (Brazil, Russia, India, China) and their role in shareholder value creation in the markets’ specific business environments. In addition, the book explores various dimensions of M&A deals in order to summarize the main trends in corporate control markets in the largest emerging countries, and how they differ from those in developed countries; to identify deal-performance relationships and the determinants of success or failure; to reveal the drivers for the premium in M&A deals; and to capture market responses to different M&A strategies. By doing so, the book makes a significant contribution to the literature, which has to date largely focused on developed markets.
This paper presents an empirical analysis of the Russian market of mergers and acquisitions (the largest market for corporate control in Central and Eastern Europe) in 2003-2012 in terms of the total volume and value of the merger and acquisition deals of the holding companies. This analysis allowed for the conclusion that, to assess and forecast the integration activity of holding companies, the most precise and appropriate models are seasonal autoregressive integrated moving average models built on weighted observations to eliminate the effect of the structural changes which are characteristic of developing economies. Forecasting the values of development of the market for corporate control may serve as “input” information to form a prompt regulation system for the mergers and acquisitions of holding companies, which meets current needs. The presented analysis makes it possible to work out measures of public policy to increase the efficiency of the integration activity of holding companies.
Along with the fast growing economy, the term «BRICs» was coined to represent the newly emerging countries — Brazil, Russia, India and China. The enhanced economy in these countries has largely improved peoples life; at the same time, it has also strongly influenced the transformation of social structure, norms and values. However, as the worlds attention centers on their economic development at the micro level, the social changes at the micro level have often been neglected, and a specific comparative study of these four countries is even more rare. This handbooks contributing authors are leading sociologists in the four countries. They fill the gap in existing literature and examine specifically the changes in each society from the perspective of social stratification, with topics covering the main social classes, the inequality of education and income, and the different styles of consumption as well as the class consciousness and values. Under every topic, it gathers articles from authors of each country. Such a comparative study could not only help us achieve a better understanding of the economic growth and social development in these countries, but also lead us to unveil the mystery of how these emerging powers with dramatic differences in history, geography, culture, language, religion and politics could share a common will and take joint action. In general, the handbook takes a unique perspective to show readers that it is the profound social structural changes in these countries that determine their future, and to a large extent, will shape the socio-economic landscape of the future world.
In Section 2.5 of monograph “The development of the BRICS countries in the global space: the potential of cooperation and trends of economic processes”, the object of study are the national banking system of the BRIC countries in the period 2007-2009, a very stressful time for the entire world banking community. Annual reports of central banks selected indicators of the World Bank report were used. The section 3.1 of monograph “The development of the BRICS countries in the global space: the potential of cooperation and trends of economic processes” discusses issues of innovative development of the BRICS in the global space. The factors of innovation sphere BRICS and performances of these countries in international rankings of competitiveness and innovation are considered.
Many liberal IR theorists argue that the spread of liberal capitalism has a civilizing influence on international relations because it decreases the role and importance of the state in the economy. Commercial relations between individuals and private enterprises based on market principles replace power based relations between states The pursuit of power advantage over other states, which has been the guiding principle of state policy for centuries, becomes an anachronism and is replaced by the pursuit of integration into the larger global economy. States are more willingness to participate in institutions because they establish rules of the game that make economic cooperation run more smoothly. The article questions the logic of this argument. Economic integration and global free trade are opening up new areas of competition between states, as Russia and other rising powers compete with the developed states of the West to attain the most profitable parts of the global marketplace. As a result, rising states are adopting neo-mercantalist policies that seek to increase their power advantages over other states. Like the 17th and 18th Century mercantilists described by Jacob Viner decades ago in his seminal essay “Power and Plenty”, they do not see a tradeoff between the pursuit of state power and economic prosperity but see these as mutually reinforcing goals. Economic integration and global free trade are opening up new areas of competition between states, as Russia and other rising powers compete with the developed states of the West to attain the most profitable parts of the global marketplace. States adopt a range of neo-mercantilist strategies in order to ensure that they are the ones that benefit most from the open world economy. Economic concerns may be taking priority over security concerns, as the prospects of military confrontation between states may have greatly diminished because economic integration makes it prohibitively costly. But states continue to be preoccupied with improving their power relative to other states because they see the pursuit of relative power advantages as being key to advancing their economic goals and securing prosperity for their countries.
Тhe article describes the unifying role of scientific and technological progress in the global economy, in which it is one of the most significant factors at the present time ofglobal international integration.
The level of corporate diversification is one of the most important decisions that management makes. The diversification strategy has its benefits and costs. According to the principles of corporate finance the efficiency of diversification strategy is always assessed by its impact on shareholder value. The article discusses the main value-creating and value-destroying drivers of diversified firms.