Covid-19: Corporate diversification and post-crash returns

Tokbolat, Yerzhan; Le, Hang

Abstract

This paper examines the impact of corporate diversification on stock returns during and after the market crash caused by Covid-19. Using regression and survival analyses, we find that diversified firms experience worse returns and slower improvement in stock prices than focused firms. However, diversified firms trading at diversification premium have better returns and faster recovery compared to those trading at discount. Our findings presented here can be relevant to academics and industry professionals in their understanding of the role of corporate diversification in difficult times.

Citation

Tokbolat, Y., & Le, H. (2022). Covid-19: Corporate diversification and post-crash returns. Finance Research Letters, 46(Part B), Article 102501. https://doi.org/10.1016/j.frl.2021.102501

• Journal Article Type: Article
• Acceptance Date: Oct 14, 2021
• Online Publication Date: Oct 16, 2021
• Publication Date: 2022-05
• Deposit Date: Mar 1, 2022
• Publicly Available Date: Oct 17, 2022
• Journal: Finance Research Letters
• Print ISSN: 1544-6123
• Electronic ISSN: 1544-6123
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 46
• Issue: Part B
• Article Number: 102501
• DOI: https://doi.org/10.1016/j.frl.2021.102501
• Public URL: https://nottingham-repository.worktribe.com/output/7530777
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S1544612321004761?via%3Dihub