This doctoral thesis consists of three articles: one literature overview and two empirical articles. The first article provides a literature overview about industrial diversification, corporate acquisitions and the intersection of both research areas. This thesis secondly analyzes whether conglomerates invest externally differently from focused firms. This investigation provides new insights on the question how industrial diversification influences corporate investment. It allows to draw conclusions whether internal investment is independent from external investment in diversified firms, or whether weak internal investment in conglomerates is (at least partially) offset by more efficient external investment, or even whether value-destructive internal investment is accompanied by external investment eliciting the same effects. In this case weakly managed multi-segment firms could be also identified by their behavior and success in corporate acquisitions. Third, the thesis copes with the question how conglomerates are perceived and treated as potential targets of corporate acquisitions. This analysis adds further aspects to the question whether multi-segment firms are discounted due to their organizational form. Assuming that the sum of the single segment of a diversified company is higher valued than the conglomerate as a whole, one could expect that investors should strive to acquire such companies, to dismantle them subsequently in order to create additional value by reshaping these inefficiently composed entities. However, there are also contradicting effects of lower synergies and higher integration costs compared to the acquisition of stand alone firms. New insights in these discussions allow us to draw conclusions whether a diversification discount potentially being harvested by a bust up takeover outweighs lower synergies and higher integration costs.

This doctoral thesis consists of three articles: one literature overview and two empirical articles. The first article provides a literature overview about industrial diversification, corporate acquisitions and the intersection of both research areas. This thesis secondly analyzes whether conglomerates invest externally differently from focused firms. This investigation provides new insights on the question how industrial diversification influences corporate investment. It allows to draw conclusions whether internal investment is independent from external investment in diversified firms, or whether weak internal investment in conglomerates is (at least partially) offset by more efficient external investment, or even whether value-destructive internal investment is accompanied by external investment eliciting the same effects. In this case weakly managed multi-segment firms could be also identified by their behavior and success in corporate acquisitions. Third, the thesis copes with the question how conglomerates are perceived and treated as potential targets of corporate acquisitions. This analysis adds further aspects to the question whether multi-segment firms are discounted due to their organizational form. Assuming that the sum of the single segment of a diversified company is higher valued than the conglomerate as a whole, one could expect that investors should strive to acquire such companies, to dismantle them subsequently in order to create additional value by reshaping these inefficiently composed entities. However, there are also contradicting effects of lower synergies and higher integration costs compared to the acquisition of stand alone firms. New insights in these discussions allow us to draw conclusions whether a diversification discount potentially being harvested by a bust up takeover outweighs lower synergies and higher integration costs.:List of Tables … vi List of Figures … viii List of Abbreviations … ix List of Symbols … x Introduction … xiii I. Literature review … 1 1. Literature review about diversification and corporate transactions … 2 1.1. Introduction … 5 1.2. Impact of diversification … 7 1.2.1. Diversification and firm value … 8 1.2.2. Diversification and investment … 15 1.2.3. Diversification and further firm characteristics … 20 1.3. Corporate transactions … 29 1.3.1. Drivers of acquisitions … 29 1.3.2. Characteristics of acquisitions … 40 1.3.3. Impact of corporate transactions … 47 1.4. Intersection between diversification and transactions … 54 1.5. Conclusion … 56 II. Diversification and acquisitions … 74 2. Diversification and the likelihood of acquisitions … 75 2.1. Introduction … 78 2.2. Theoretical background … 81 2.2.1. Diversification and the likelihood of acquisitions … 81 2.2.2. Diversification and deal characteristics … 84 2.2.3. Diversification and deal performance … 86 2.3. Data and methodology … 87 2.4. Descriptive statistics … 91 2.5. Diversification and corporate transactions … 92 2.5.1. Diversification and transaction probability … 92 2.5.2. Diversification and deal characteristics … 95 2.5.3. Diversification and post-acquisition performance … 98 2.6. Conclusion … 100 III. Diversification and takeover likelihood … 109 3. Do acquirers of conglomerates benefit from the diversification discount? … 110 3.1. Introduction … 113 3.2. Theoretical background … 115 3.2.1. Corporate performance, diversification and takeover probability … 115 3.2.2. Entrenchment, diversification and takeover probability … 117 3.2.3. Synergies, integration costs and takeover probability … 119 3.2.4. Bid premiums and post-acquisition returns … 120 3.3. Data and methodology ... 123 3.4. Descriptive statistics … 127 3.4.1. Successful bids and diversification … 127 3.4.2. Bids and conglomerates: univariate analysis … 129 3.5. Diversification and the likelihood of being acquired … 130 3.6. Diversification and the bid premiums paid … 134 3.7. Diversification and the CAR of the acquirer … 138 3.8. Conclusion … 140

This thesis sheds light on the functioning and characteristics of payment systems to serve as a foundation for understanding the drivers for higher payment system efficiency. Its central goal is to develop insights into the determinants of collective payment choice suitable to lower payment costs to society. So far, the institutional environment, as potential important influence on the payment instrument mix, has not been focused on in the literature. Therefore, particular emphasis is laid on the empirical analysis of the impact of institutional factors on the share of card payments on consumer spending at the point of sale (POS). For this, a unique panel data set is constructed covering the eight most important European payment markets ranked by non-cash transaction volumes. The empirical results allow formulating conditions necessary to achieve a more efficient payment mix. They also form a basis for the assessment of related policy measures with a focus on the SEPA project in terms of their efficiency enhancing effect. Future research could possibly build upon the panel data collected.

This thesis sheds light on the functioning and characteristics of payment systems to serve as a foundation for understanding the drivers for higher payment system efficiency. Its central goal is to develop insights into the determinants of collective payment choice suitable to lower payment costs to society. So far, the institutional environment, as potential important influence on the payment instrument mix, has not been focused on in the literature. Therefore, particular emphasis is laid on the empirical analysis of the impact of institutional factors on the share of card payments on consumer spending at the point of sale (POS). For this, a unique panel data set is constructed covering the eight most important European payment markets ranked by non-cash transaction volumes. The empirical results allow formulating conditions necessary to achieve a more efficient payment mix. They also form a basis for the assessment of related policy measures with a focus on the SEPA project in terms of their efficiency enhancing effect. Future research could possibly build upon the panel data collected.:1 Introduction 1.1 Payment behaviour in selected European countries 1.2 Research question and approach 2 Foundations: Payment systems and markets 2.1 Functioning of payment systems 2.1.1 Payments, market participants and payment system 2.1.2 Payment instruments and methods 2.1.3 Clearing and settlement arrangements 2.1.4 First observations on obstacles to payment systems development 2.2 Network character of payment markets 2.2.1 Theories of networks 2.2.2 Demand-side network effects in payment markets 2.2.3 Two-sided markets and payment cards 2.2.4 Supply-side economies of scale and open access to infrastructure 2.2.5 Obstacles to payment system development 3 Efficiency of payment systems 3.1 Research on payment infrastructure costs 3.1.1 Efficiency of interbank retail payment systems 3.1.2 Efficiency of intrabank payment processing 3.1.3 Factors influencing infrastructure efficiency 3.2 Research on payment instrument costs at the POS 3.2.1 Methodology and classification of the literature 3.2.2 Estimates of payment costs at the POS 3.2.3 Indicative efficiency ranking of payment instruments 4 Research on payment instrument choice at the POS 4.1 Data sources and categorisation of payment choice determinants 4.2 Price characteristics of payment instruments 4.3 Non-price characteristics of payment instruments 4.4 Transaction attributes 4.5 Constraints on payment choice 4.6 Developing an institutional view of payment choice 5 Empirical analysis: Institutional determinants shaping the POS payment mix 5.1 Two-step modelling approach 5.2 Panel construction and exploration of key data series 5.2.1 Panel data collection and overview of variables 5.2.2 Card usage and cash holding 5.2.3 Payment card diffusion and POS terminal density 5.3 European card schemes and markets 5.3.1 Institutional data collection 5.3.2 Description of European card markets 5.3.3 Overview of institutional data series 5.4 Payment decision 5.4.1 Development of the model and possible extensions 5.4.2 Discussion of the regression results 5.4.3 Diagnostic tests 5.5 Sourcing decision 5.5.1 Diffusion of payment cards 5.5.2 Density of POS terminals 5.5.3 Cash holding and availability at ATMs 5.6 Conclusions: Institutional determinants of payment choice 5.6.1 Linking empirical and theoretical analysis 5.6.2 Route for further research 6 Prospects for an efficient European payment mix 6.1 Objectives for establishing a European payment markets 6.2 SEPA for cards regulatory framework 6.2.1 Regulatory ecosystem 6.2.2 Regulatory framework set by European authorities 6.2.3 Standardization industry initiatives 6.3 Remaining obstacles for an efficient payment mix and outlook Appendix 6.3.1 A–1: Credit- and debit-based payment mechanism 6.3.2 A–2: Multilateral settlement: Access, settlement assets and methods 6.3.3 A–3: Statistical properties of variables 6.3.4 A-4: Unit root tests References