Return Sensitivity to Industry Shocks: Evidence on the (In-)Efficient Use of Internal Capital Markets

Mergers and acquisitions in shipping

“…Corporate diversification is wealth destroying and leads to a valuation discount, while focusincreasing events have been argued to increase wealth (John and Ofek, 1995). 15 There is debate in the literature on the extent to which the strategies that firms adopt are contingent upon the arrival of positive or negative industry shocks (Coco and Mahrt-Smith, 2001). As competition has intensified over the last 30 years, pressures to improve operational efficiencies have driven shipping firms to engage in extensive M&A activity seeking economies of scale.…”