Corporate Diversification and Financial Policy Consequences: A Literature Survey

This review paper analyses the financial policy consequence of mergers and acquisitions. The investment and capital structure polices changes in the corporate set up, following mergers and acquisitions are analyzed from literature (empirical and conceptual) for the period 1971 to 2013. To make the task manageable, only the pivotal papers in the field, published by corporate finance journals in the relevant period were considered. The analysis of the literature showed that mergers and acquisition decisions do influence the investment and capital structure policies of organizations significantly. Hence, the need to synchronize these financial policy changes with mergers and acquisition decisions is appreciated.