International Evidence on the Value of Product and Geographic Diversity
The author examines the effect of product and geographic diversification on firm value for a sample of 1,914 corporations in 18 countries. His results indicate that both product and geographic diversification destroy value at high levels of diversi...
| Main Author: | |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2001/12/1660254/international-evidence-value-product-geographic-diversity http://hdl.handle.net/10986/19407 |
| Summary: | The author examines the effect of
product and geographic diversification on firm value for a
sample of 1,914 corporations in 18 countries. His results
indicate that both product and geographic diversification
destroy value at high levels of diversification, suggesting
that agency and influence costs arising from the increased
complexity outweigh the benefits of diversification at high
levels. Geographic diversification is valuable at low
levels, however. The author finds that insider ownership is
associated with less diversification, across both product
and geographic segments, suggesting that insiders view
corporate diversification as value destroying. |
|---|