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Título
Diversification: Value-Creating or Value-Destroying Strategy? Evidence from Using Panel Data
Autor(es)
Materia
Diversificación corporativa
Firma
Corporate diversification
Relatedness
Firm value
Excess value
Fecha de publicación
2007
Editor
Universidad de Salamanca (España). Facultad de Economía y Empresa
Citación
Galván, A., Pindado, J., y Torre, C. (2007). Diversification: Value-Creating or Value-Destroying Strategy? Evidence from Using Panel Data. "Nuevas Tendencias en Dirección de Empresas", 01/07. Retrieved mayo 8, 2009, from http://www.eco.uva.es/empresa/uploads/dt_01_07.pdf
Resumen
This paper provides evidence on how the diversification strategy impact on the firm value. Furthermore the paper studies the effect of the levels and types of diversification on the firm value. To achieve this aim, we propose a value model that incorporates the level and type of diversification. The estimation of the model by using the Generalized Method of Moments provides interesting results. Consistent with the value-destroying expectations, we find a reduction in the value of the diversified companies in the eurozone countries, however there is a non linear relationship between the diversification and value, giving rise to an optimal level of diversification. Moreover our results support that related diversification is more value-creating than non-related diversification. Additionally we test the effect of diversification of market valuation by focusing on the discount that diversified firms trade at, then a value destroying is achieved for the diversified companies in our sample, and we also have evidence on the hypothesis that relatedness moderates the value loss from diversification.
Descripción
Documento de Trabajo 04/07 perteneciente a la colección de documentos de trabajo "Nuevas Tendencias en Dirección de Empresas", dentro del Máster en Investigación en Economía y Empresa.
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