Abstract
Because corporate diversification coevolves with organizational structure, a discount for diversification, which is widely documented in the literature, can be caused by organizational structure rather than by the industrial scope of the firm. I examine this possibility based on a large sample of Japanese firms for which the legal (parent–subsidiary) structure of the organization is easily observable. I identify a significant discount for diversified firms with and without control over the organizational structure. I also find that firms with a legally segmented structure (e.g., holding companies) are deeply discounted. My results suggest that diversification and organization are both important determinants of firm value.
| Original language | English |
|---|---|
| Pages (from-to) | 467-499 |
| Number of pages | 33 |
| Journal | Financial Management |
| Volume | 45 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 2016 Jun 1 |
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ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics
Cite this
Diversification, Organization, and Value of the Firm. / Ushijima, Tatsuo.
In: Financial Management, Vol. 45, No. 2, 01.06.2016, p. 467-499.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Diversification, Organization, and Value of the Firm
AU - Ushijima, Tatsuo
PY - 2016/6/1
Y1 - 2016/6/1
N2 - Because corporate diversification coevolves with organizational structure, a discount for diversification, which is widely documented in the literature, can be caused by organizational structure rather than by the industrial scope of the firm. I examine this possibility based on a large sample of Japanese firms for which the legal (parent–subsidiary) structure of the organization is easily observable. I identify a significant discount for diversified firms with and without control over the organizational structure. I also find that firms with a legally segmented structure (e.g., holding companies) are deeply discounted. My results suggest that diversification and organization are both important determinants of firm value.
AB - Because corporate diversification coevolves with organizational structure, a discount for diversification, which is widely documented in the literature, can be caused by organizational structure rather than by the industrial scope of the firm. I examine this possibility based on a large sample of Japanese firms for which the legal (parent–subsidiary) structure of the organization is easily observable. I identify a significant discount for diversified firms with and without control over the organizational structure. I also find that firms with a legally segmented structure (e.g., holding companies) are deeply discounted. My results suggest that diversification and organization are both important determinants of firm value.
UR - http://www.scopus.com/inward/record.url?scp=84945915624&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84945915624&partnerID=8YFLogxK
U2 - 10.1111/fima.12108
DO - 10.1111/fima.12108
M3 - Article
AN - SCOPUS:84945915624
VL - 45
SP - 467
EP - 499
JO - Financial Management
JF - Financial Management
SN - 0046-3892
IS - 2
ER -