The DOI matches its Crossref record; 5 of the 5 references it cites were found in a registry or an index.
Explaining the Diversification Discount
Open accessAbstract
This paper argues that the documented discount on diversified firms is not per se evidence that diversification destroys value. Firms choose to diversify. We use three alternative econometric techniques to control for the endogeneity of the diversification decision, and find evidence supporting the selfselection of diversifying firms. We find a strong negative correlation between a firms choice to diversify and firm value. The diversification discount always drops, and sometimes turns into a premium. There also exists evidence of selfselection by refocusing firms. These results point to the importance of explicitly modeling the endogeneity of the diversification status in analyzing its effect on firm value.
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Citations
Cites
Sample Selection Bias as a Specification Error
Heckman, J. J. (1979) · Econometrica · doi:10.2307/1912352 · Cited by 28,779
Specification Tests in Econometrics
Hausman, J. A. (1978) · Econometrica · doi:10.2307/1913827 · Cited by 18,820
Determinants of corporate borrowing
Myers, S. C. (1977) · Journal of Financial Economics · doi:10.1016/0304-405x(77)90015-0 · Cited by 13,169
Dixit, R. K., & Pindyck, R. S. (1994) · doi:10.1515/9781400830176 · Cited by 9,029
Bound, J., Jaeger, D. A., & Baker, R. M. (1995) · Journal of the American Statistical Association · doi:10.2307/2291055 · Cited by 1,018
Cited by
Corporate Governance and Acquirer Returns
MASULIS, R. W., WANG, C., & XIE, F. (2007) · The Journal of Finance · doi:10.1111/j.1540-6261.2007.01259.x · Cited by 1,772
Business model design and the performance of entrepreneurial firms
Zott, C., & Amit, R. (2007) · Organization Science · doi:10.1287/orsc.1060.0232 · Cited by 1,707
Controlling for endogeneity with instrumental variables in strategic management research
Bascle, G. (2008) · Strategic Organization · doi:10.1177/1476127008094339 · Cited by 1,133
Dominant shareholders, corporate boards, and corporate value: A cross-country analysis
Dahya, J., Dimitrov, O., & McConnell, J. J. (2008) · Journal of Financial Economics · doi:10.1016/j.jfineco.2006.10.005 · Cited by 659
Campello, M. (2002) · The Journal of Finance · doi:10.1111/1540-6261.00512 · Cited by 474
Metadata
- Authors
- Campa, J. M., & Kedia, S.
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 2002-08
- Volume
- 57
- Issue
- 4
- Pages
- 1731-1762
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W3023311111
- Cited by
- 1,345
- References
- 5
- FWCI
- 131.70
- Type
- journal article
- Language
- en
- Open access
- bronze
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Data sources
Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
