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1 edition of pattern and valuation effects of corporate diversification found in the catalog.

pattern and valuation effects of corporate diversification

pattern and valuation effects of corporate diversification

a comparison of the United States, Japan, and other East Asian economies


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  • 14 Currently reading

Published by United Nations University, World Institute for Development Economics Research in Helsinki .
Written in English

  • Diversification in industry -- United States,
  • Diversification in industry -- Japan,
  • Diversification in industry -- East Asia

  • Edition Notes

    StatementStijn Claessens...[et. al.]
    SeriesWIDER discussion paper -- no.2001/127
    ContributionsClaessens, Stijn., World Institute for Development Economics Research.
    The Physical Object
    Pagination30 p;
    Number of Pages30
    ID Numbers
    Open LibraryOL19817555M

    The Anatomy of Bank Diversification 5 Laeven & Levine apply a modification of Lang & Stulz ‘chop shop’ method to measuring diversification effects on bank market valuation. They compare the mar-ket-to-book ratio of a diversified financial institution with that of a . The Value of Diversification. Financial diversification means you don't have all your eggs in one basket. If you have all of your money in one company stock and that company goes bust, you could literally lose all of your money. Even if your money is diversified among stocks in a well balanced fund, if the stock market crashes all of your money. 50 The Journal of Lending & Credit Risk Management February Measuring Portfolio Diversification by John K. Ford B ankers and regulatory agencies use limits on the size of individ-ual credits as a device to control the risk of the loan Size: 15KB. We examined the impact of corporate diversification and financial structure on the firms’ financial performance. We collected data from manufacturing firms from Pakistan, India, Sri Lanka, and Bangladesh. We used panel data of 14 years from – to analyze the results. We applied a two-step dynamic panel approach to analyze the by: 3.

    DIVERSIFICATION STRATEGY, A WAY TOWARD THE COMPETITIVE ADVANTAGE Ebrahim Chirani Department of Business Management, Islamic Azad University, Rasht Branch, Rasht, Iran Mona Effatdoost MA of Business Management, Department of Management, Science and Research Branch, Islamic Azad University, Rasht, Iran (Corresponding Author) Abstract.

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pattern and valuation effects of corporate diversification Download PDF EPUB FB2

Stijn Claessens & Simeon Djankov & Joseph P. Fan & Larry H. Lang, "The Pattern and Valuation Effects of Corporate Diversification: A Comparison of the United States, Japan, and Other East Asian Economies," WIDER Working Paper Series DP, World Institute for Development Economic Research (UNU-WIDER).

Corporate Diversification: A Fundamental Exploration of General Business Environments, Industry Environments and Firm Characteristics, Jolly Sahni, Ariff S M.R., Laeven, L., & Levine, R. Identifying the valuation effects and agency costs of corporate diversification: Evidence from the geographic diversification of US by: 1.

Valuation Effects of Overconfident CEOs on Corporate Diversification and Refocusing Decisions Article (PDF Available) in Journal of Banking & Finance March with Reads. This paper examines the effect of global diversification on firm value using a data set of US firms from to We document that global diversification enhances firm value.

The Valuation Effects of Global and Industrial Diversification. Degree. Master of Science (Economics and Business Administration) Degree programme. International Business. Thesis advisor(s) Prof. Viveca Sasi. Year of approval.

Number of pages. Language. English. AbstractFile Size: 1MB. The use of disjoint periods to establish the overconfidence measure in year t − 1 and to gauge its effects on corporate diversification valuation and outcomes in year t is intended to alleviate endogeneity concerns.

Our study reports results using both measures of CEO by: 1. To estimate pattern and valuation effects of corporate diversification book much of the diversification discount can be attributed to corporate governance, we regress our measure of firm value against a dummy variable for diversified firms and a range of control variables, with the estimated coefficient on the diversification dummy serving as a baseline estimate of the by:   Diversified organizations are everywhere - in the private, public and not-for-profit sectors.

With diversification comes complication, and if the varied activities of these organizations are not carried out effectively, their very diversity can lead to major inefficiency at best and corporate failure at ification Strategy challenges conventional wisdom and.

contrast, we find no such evidence for industrial diversification. We find evidence of both financial and real effects driving such a value enhancement from global diversification. Furthermore, we find that the valuation benefits from global diversification are higher if Cited by: the announcement effects depend upon firm-level corporate governance.

To estimate how much of the diversification discount can be attributed to corporate governance, we regress our measure of firm value against a dummy variable for diversified firms and a range of control variables, with the estimated coefficient on the diversificationCited by:   In our paper, Identifying the Valuation Effects and Agency Costs of Corporate Diversification: Evidence from the Geographic Diversification of U.S.

Banks, forthcoming in the Review of Financial Studies, we develop and implement two new approaches for identifying the causal impact of the geographic diversification of bank holding company (BHC) assets on their.

Effects of Corporate Diversification on Productivity ANTOINETTE SCHOAR* ABSTRACT Using plant-level observations from the Longitudinal Research Database I show that conglomerates are more productive than stand-alone firms at a given point in time. Dynamically, however, firms that diversify experience a net reduction in pro-ductivity.

If the adverse valuation effects of diversifying across states dominate the positive effects from economies of scale and enhanced risk diversification even for this simple form of geographic diversification, then this advertises the importance of agency problems within banks more by:   During the last 15 years an extensive academic literature has documented the valuation consequences of corporate industrial diversification.

For example, Lang and Stulz () and Berger and Ofek () show that industrially diversified firms trade at a discount relative to undiversified firms in their industries. These two papers reach the same conclusion Cited by: needs to understand the valuation techniques of modern corporate finance.

This book is intended for a reader who has some understanding of basic financial management, such as the role and application of discounted cash flows (DCF). We start from the DCF framework and build up to the valuation models that are widely used in prac-tice.

The Impact of Unrelated Diversification on Firm Value 1 Chapter 1. Introduction Corporate diversification and its impact on firm value is a popular and widely discussed topic in literature, and can in general be divided into three categories: 1.

Corporate diversification. Diversification is an act of an existing entity branching out into a new business opportunity. This corporate strategy enables the entity to enter into a new market segment which it does not already operate in. The decision to diversify can prove to be a challenging decision for the entity as it can lead to extraordinary rewards with risks.

articles. As shown in Table 2, the most cited diversification publication between and (the first decade years) was Rumelt’s paper Diversification strategy and profitability, followed by Palepu’s paper Diversification strategy, profit performance and the entropy measure, and Williamson’s book Markets Hierarchies (see Table 2).File Size: KB.

We estimate diversification’s effect on firm value by imputing stand-alone values for individual business segments. Comparing the sum of these stand-alone values to the firm’s actual value implies a 13% to 15% average value loss from diversification during File Size: 1MB. The valuation effects of global and industrial diversification The different theories explaining the international business related background of corporate diversification have also been presented and discussed, from Coase's market imperfection theory to Buckley and Casson's internationalisation theory and Dunning's eclectic paradigm.

Author: Christian Ruffini. Identifying theValuation Effects and Agency Costs of Corporate Diversification that cross-economy banking boosts efficiency and growth while reducing economic volatility. Our results simply suggest that the valuation-reducing effects of diversification dominate any such valuation-enhancing Size: KB.

Executives are always looking for ways to expand their businesses, and diversification is one approach they regularly ask about. The answer is always unambiguous: diversifying, in itself, is neither good nor bad; what matters is whether a company can add value.

Although more than 70 percent of large. literature of firm valuation, but there is significant divergence on whether or not diversification creates long-run competitive advantage (Markides and Williamson, ).

Nowadays, there is a debate in the strategic management literature about the role played by corporate diversification as a value maximization strategy for shareholders.

AFile Size: KB. The Effect of Institutional Factors on the Value of Corporate Diversification The Harvard community has made this article openly available. Please share how this access benefits you. Your story matters Citation Kuppuswamy, Venkat, George Serafeim, and Belen Villalonga.

"The Effect of Institutional Factors on the Value of Corporate Diversification.". Stijn Claessens (born Constantijn Anton Marie Francois Claessens, J ) is a Dutch economist who currently serves as the Head of Financial Stability Policy department of the Bank for International Settlements.

He worked for fourteen years at World Bank beginning in until where he assumed various positions including that of Lead : Financial economics. Does Corporate Diversification Destroy Value.

John R. Graham. Search for more papers by this author. failure to account for these differences can lead to incorrect inferences regarding the valuation effects of corporate diversification. Our evidence suggests that these selection biases are important.

book asset values are marked‐to. corporate diversification studies. Measuring the Effect of Diversification on Firm Value To value multisegment firms, Berger and Ofek ~. impute values for each segment of a diversified company using valuation multiples from the median stand-alone firm in the same industry as the segment being valued.

More importantly, we demonstrate that failure to control simultaneously for both dimensions of diversification results in over-estimation of the negative value impact of industrial diversification, but has little impact on estimates of the positive value impact of geographic diversification.

ABSTRACT. We provide evidence on the agency cost explanation for corporate diversification. We find that the level of diversification is negatively related to managerial equity ownership and to the equity ownership of outside blockholders.

these differences can lead to incorrect inferences regarding the valuation. effects of corporate diversification. Our evidence suggests that these selec-tion biases are important. We show that units that are combined into firms through merger or ac-quisition are priced at significant discounts (relative to the median stand.

on dual relationships: diversification and firm-valuation, diversification and compensation of the top executives, etc. There are a few studies that investigate diversification effects in multi-dimensional settings. For example, Nam et al. () consider the relationship between diversification levels, reliance on equity.

Diversification Effects on Firm Value and Corporate Governance 5 I. INTRODUCTION BACKGROUND INTRODUCTION The interest of the importance of corporate governance has first produced by the. in an efficient capital market, corporate diversification is. the ____ will be the portfolio effects of risk reduction.

The term structure of interest rates is the pattern of interest rate yields for debt securities that are similar in all respects except for differences in. This sample paper on (Research Sample Paper on Models Used by Companies to Leverage Diversification) was uploaded by one our contributors and does not necessarily reflect how our professionals write our papers.

If you would like this paper removed from our website, please contact us via our Contact Us Page. Diversification Strategies in the Global Retailing Industry: Essays on the Dimensions and Performance Implications DISSERTATION of the University of St.

Gallen, School of Management, Economics, Law, Social Sciences and International Affairs to obtain the title of Doctor of Philosophy in Management submitted by Timo Sohl from Germany.

Corporate Diversification Cynthia A. Montgomery I n most models offered to introductory and even intermediate students of economics, firms are homogeneous producers of single products.

This abstraction has a powerful impact on the way we think about economic behavior: firms in an industry look like one another and management, who by. The increasing pattern is robust; it is not sensitive to accounting changes in segment definition, different weighting methods, and different IO data employed.

As an application, we examine the valuation effects of relatedness in the context of corporate diversification. A firm using this type of related diversification operates in multiple businesses, none of which accounts for more that 70% of firm revenues that share a significant number of dimensions including inputs, production technologies, distribution channels, similar customers, etc.

Does diversification create value. One such belief relates to the value of corporate diversification. Popular views about diversification have swung like a pendulum over the past half century, from a generallypositive view in the s and s, when many large conglomerates were formed, to a generally-negative view in the s and early.

Diversification, Organization, and Value of the Firm * USHIJIMA Tatsuo Aoyama Gakuin University. Abstract. Because corporate diversification and organization coevolve, diversification - discounts, which are widely reported in the literature, can be caused by organizational structure, rather than by the industrial scope of the firm.

TheFile Size: KB. Corporate diversification is a prime example of a once-popular management idea that has fallen from grace. In the s, the “conglomerate kings” — giants such as Gulf & Western and ITT — snapped up dozens of businesses to general : Mary Kwak.Diversification and efficiency of investment by East Asian corporations (English) Abstract.

The East Asian financial crisis has been attributed in part to the corporate diversification associated with the misallocation of capital investment toward Cited by: Read this essay on Effect of Diversification on Firm Value.

Come browse our large digital warehouse of free sample essays. Get the knowledge you need in order to pass your classes and more. Only at ".