Both Sides of Corporate Diversification: The Value Impacts of Geographic and Industrial Diversification

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Both Sides of Corporate Diversification: The Value Impacts of Geographic and Industrial Diversification

Author Info

Bodnar, G.M.
Tang, C.
Weintrop, J.

Abstract

This paper examines the effect of both geographic and industrial diversification on firm value for a sample of over 20,000 firm-year observations of US corporations from 1987-1993. Our multivariate tests indicate the average value of a firm with international operations is 2.2% higher than a comparable domestic single-activity firm, while the average value of a firm with activities in multiple industrial segments is 5.4% lower than a protfolio of comparable domestic single-activity firms.

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Paper provided by Wharton School - Weiss Center for International Financial Research in its series Weiss Center Working Papers with number 98-02.

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Length: 36 pages
Date of creation: 1998
Date of revision:
Handle: RePEc:fth:pennif:98-02

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Related research
Keywords: GEOGRAPHY ; INDUSTRY ; CORPORATIONS;

Find related papers by JEL classification:
F3 - International Economics - - International Finance
G3 - Financial Economics - - Corporate Finance and Governance

Cited by:
(explanations, 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.)

Campa, Jose M. & Kedia, Simi, 2000. "Explaining the diversification discount," IESE Research Papers D/424, IESE Business School. [Downloadable!]
Other versions:
- José Manuel Campa & Simi Kedia, 1999. "Explaining the Diversification Discount," Working Papers 99-06, New York University, Leonard N. Stern School of Business, Department of Economics. [Downloadable!]
- Jose Manuel Campa & Simi Kedia, 2002. "Explaining the Diversification Discount," Journal of Finance, American Finance Association, vol. 57(4), pages 1731-1762, 08. [Downloadable!] (restricted)
Campa, Jose M. & Chang, Kevin & Refalo, James F., 2000. "Options-based analysis of emerging market exchange rate expectations: Brazil's real plan, 1994-1999, An," IESE Research Papers D/425, IESE Business School. [Downloadable!]

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