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Covid-19: Corporate diversification and post-crash returns

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  • 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.

Suggested Citation

  • Tokbolat, Yerzhan & Le, Hang, 2022. "Covid-19: Corporate diversification and post-crash returns," Finance Research Letters, Elsevier, vol. 46(PB).
    • Handle: RePEc:eee:finlet:v:46:y:2022:i:pb:s1544612321004761
    DOI: 10.1016/j.frl.2021.102501
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