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| Title: | Can growth opportunities explain the diversification discount? |
| Author (s): | Stowe, John Xing, Xuejing |
| Department/Lab Affiliations: | Economics & Finance |
| Keywords: | Corporate diversification Diversification discount Firm valuation Growth opportunities |
| Issue Date: | 2006 |
| Publisher: | Elsevier |
| Citation: | John D. Stowe and Xuejing Xing. Do growth opportunities explain the diversification discount?, Journal of Corporate Finance, Vol. 12, Iss. 4, pp. 783-796, 2006. |
| Abstract: | We investigate the possibility that the diversification discount is due to differing growth opportunities between diversified and single-segment firms. We do this by comparing diversified business segments with individual single-segment same-industry firms of comparable growth opportunities. Using a sample of 230 diversifying firms from 1981 to 1997, we find a significant valuation discount in diversified firms even when we control for the difference in growth opportunities between diversified and single-segment firms. This result suggests that differing growth opportunities between diversified and single-segment firms cannot account for the diversification discount. |
| Type: | Article - Journal text |
| Copyright Notice: | Pre-print: author can archive with restrictions;Restriction: This does not include Cell Press; Post-print: author can archive; This material is presented to ensure timely dissemination of scholarly and technical work. Copyright and all rights therein are retained by authors or by other copyright holders. All persons copying this information are expected to adhere to the terms and constraints invoked by each author's copyright. In most cases, these works may not be reposted without the explicit permission of the copyright holder. FULL COPYRIGHT INFORMATION: |
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| title | Can growth opportunities explain the diversification discount? |
| contributor.author | Stowe, John |
| contributor.author | Xing, Xuejing |
| contributor.deptlab | Economics & Finance |
| subject | Corporate diversification |
| subject | Diversification discount |
| subject | Firm valuation |
| subject | Growth opportunities |
| date.issued | 2006 |
| publisher | Elsevier |
| identifier.citation | John D. Stowe and Xuejing Xing. Do growth opportunities explain the diversification discount?, Journal of Corporate Finance, Vol. 12, Iss. 4, pp. 783-796, 2006. |
| identifier.pub.URI | |
| description.abstract | We investigate the possibility that the diversification discount is due to differing growth opportunities between diversified and single-segment firms. We do this by comparing diversified business segments with individual single-segment same-industry firms of comparable growth opportunities. Using a sample of 230 diversifying firms from 1981 to 1997, we find a significant valuation discount in diversified firms even when we control for the difference in growth opportunities between diversified and single-segment firms. This result suggests that differing growth opportunities between diversified and single-segment firms cannot account for the diversification discount. |
| type | Article - Journal |
| type.DCMIType | text |
| type.status | Postprint |
| rights | Pre-print: author can archive with restrictions;Restriction: This does not include Cell Press; Post-print: author can archive; |
| rights | This material is presented to ensure timely dissemination of scholarly and technical work. Copyright and all rights therein are retained by authors or by other copyright holders. All persons copying this information are expected to adhere to the terms and constraints invoked by each author's copyright. In most cases, these works may not be reposted without the explicit permission of the copyright holder. |
| rights.URI | |
| date.available | 2008-07-03T14:53:39Z |
| identifier.persist.URI |