The Berger and Ofek (1995) excess value measure, comparing a conglomerate’s actual market value to an imputed value based on standalones, has become the standard method to determine value effects of diversification. In this paper, we address a significant bias in this procedure stemming from...

We examine how a bidder's failure to consummate a deal affects its subsequent M&As. After experiencing unconsummated M&As, firms choose smaller targets than before, more likely hire advisors, hire more advisors, and more likely make cash bids. Effects are strongest for bids directly succeeding...