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Does corporate diversication create value in south america? The chilean case

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  • Christian Espinosa

    (Facultad de Economía y Empresa, Universidad Diego Portales)

  • Carlos Maquieira
  • Joao Paulo Vieito

    (School of Business Studies, Polytechnic Institute of Viana do Castelo, Portugal)

Abstract

This investigation is among the firsts to analyze the impact of corporate diversification in the firm value, controlling for shareholders ownership concentration, in companies listed in one of the most developed stock markets in America Latina – the Chile stock market. Our results describe a negative impact of corporate diversification in firm value only when the major shareholder owns more than 67% of the firm (supermajority rule in Chile).When the analyzed was performed to the three major shareholders, if they hold less than 50% of the firm stocks there is no relation between excess value and ownership concentration for diversified firms.We also conclude that when ownership is less concentratedon the main shareholders, thediversification effect does not destroy firm value.

Suggested Citation

  • Christian Espinosa & Carlos Maquieira & Joao Paulo Vieito, 2012. "Does corporate diversication create value in south america? The chilean case," Working Papers 38, Facultad de Economía y Empresa, Universidad Diego Portales.
    • Handle: RePEc:ptl:wpaper:38
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