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The Pattern and Valuation Effects of Corporate Diversification: A Comparison of the United States, Japan, and Other East Asian Economies

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  • Stijn Claessens
  • Simeon Djankov
  • Joseph P. H. Fan
  • Larry H. P. Lang

Abstract

We document that firms in eight East Asian countries and Japan diversify into more segments and engage into more related businesses―as measured by the degree of vertical relatedness and complementarity―than firms in the USA. Using data for the 1990-6 period, we observe a trend towards complementary diversification in the United States and the eight East Asian countries, and a trend towards more vertical integration in Japan. The increase in relatedness for US firms is due to the divestiture of unrelated assets.

Suggested Citation

  • Stijn Claessens & Simeon Djankov & Joseph P. H. Fan & Larry H. P. Lang, 2001. "The Pattern and Valuation Effects of Corporate Diversification: A Comparison of the United States, Japan, and Other East Asian Economies," WIDER Working Paper Series DP2001-127, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:dp2001-127
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    Cited by:

    1. Svetlana Grigorieva & Tatiana Petrunina, 2013. "The performance of mergers and acquisitions in emerging capital markets: new evidence," HSE Working papers WP BRP 20/FE/2013, National Research University Higher School of Economics.
    2. Laeven, Luc, 2001. "International evidence on the value of product and geographic diversity," Policy Research Working Paper Series 2729, The World Bank.
    3. Vasanthan Subramaniam & Shaista Wasiuzzaman, 2019. "Corporate diversification and dividend policy: empirical evidence from Malaysia," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(3), pages 735-758, September.
    4. Claessens, Stijn & Djankov, Simeon & Fan, Joseph P.H. & Lang, Larry H.P., 2000. "The Costs of Group Affiliation: Evidence from East Asia," CEI Working Paper Series 2000-5, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    5. Lee, Kian-Tek & Hooy, Chee-Wooi & Hooy, Guat-Khim, 2012. "The value impact of international and industrial diversifications on public‐listed firms in Malaysia," Emerging Markets Review, Elsevier, vol. 13(3), pages 366-380.

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