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 |
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Pages (from-to) | 467-499 |
Number of pages | 33 |
Journal | Financial Management |
Volume | 45 |
Issue number | 2 |
DOIs | |
Publication status | Published - 2016 Jun 1 |
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics