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Article
Publication date: 1 January 1997

James D. Bogert and Shiva Rachakonda

The inverse relationship between means of long‐term economic performance measures of toehold targets and associated investing corporations suggests minority‐level equity holdings…

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Abstract

The inverse relationship between means of long‐term economic performance measures of toehold targets and associated investing corporations suggests minority‐level equity holdings may often provide benefits that go beyond the total return provided by dividends and capital appreciation. Like security options, minority investments plausibly limit the downside risk associated with some corporate investment alternatives without limiting the upside potential that can be realized if the toehold target becomes very successful. Thus, a better corporate strategy may be to hold a portfolio of minority‐level equity investments than to hold an option on a mutual fund.

Details

Competitiveness Review: An International Business Journal, vol. 7 no. 1
Type: Research Article
ISSN: 1059-5422

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