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Corporate Diversification: Good for Some Bad for Others Author info | Abstract | Publisher info | Download info | Related research | Statistics Felipe Balmaceda ()
In this paper a model based on conflicts of interest between shareholders, the CEO and divisional managers is developed to explain why corporate diversification is good for some firms and bad for others. It is shown that when the decision to diversify is endogenous, whether diversification destroys value depends on the severity of con‡icts of interests and the complementarities across divisions and not, as usual in the literature that explains value-decreasing diversification, on the efficiency of internal capital markets.
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Paper provided by Centro de Economía Aplicada, Universidad de Chile in its series Documentos de Trabajo with number
141.
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Date of creation: 2002Date of revision:
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Keywords: References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.:
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Servaes, Henri, 1996.
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Finance
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Benjamin E. Hermalin & Michael L. Katz, 1994.
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[Downloadable!] Benjamin E. Hermalin and Michael L. Katz., 2000.
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"Corporate Diversification and Agency ,"
Economics Working Papers
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Research Program in Finance, Working Paper Series
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Kaplan, Steven N & Weisbach, Michael S, 1992.
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Other versions: Karl Lins & Henri Servaes, 1999.
"International Evidence on the Value of Corporate Diversification ,"
Journal of Finance ,
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"A Clinical Exploration of Value Creation and Destruction in Acquisitions: Organizational Design, Incentives, and Internal Capital Markets ,"
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"Risk Reduction as a Managerial Motive for Conglomerate Mergers ,"
Bell Journal of Economics ,
The RAND Corporation, vol. 12(2), pages 605-617, Autumn.
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Raghuram Rajan & Henri Servaes & Luigi Zingales, 1998.
"The Cost of Diversity: The Diversification Discount and Inefficient Investment ,"
NBER Working Papers
6368, National Bureau of Economic Research, Inc.
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Other versions:
Raghuram Rajan & Henri Servaes & Luigi Zingales, .
"The Cost of Diversity: The Diversification Discount and Inefficient Investment ,"
CRSP working papers
357, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
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"Internal Capital Market Controls and Financial Performance in Multidivisional Firms ,"
Journal of Industrial Economics ,
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