RT info:eu-repo/semantics/article
T1 Does it really matter how a firm diversifies? Assets-in-place diversification versus options-based diversification
A1 Andrés Alonso, Pablo de
A1 Fuente Herrero, Gabriel de la
A1 Velasco González, María Del Pilar
K1 Empresas-Finanzas
K1 Corporate Finance
K1 Corporate diversification
K1 growth opportunities
K1 firm value
K1 investment strategy
K1 self-selection
AB This paper analyzes whether the valuation effect of corporate diversification depends on how this strategy is implemented. According to the real options approach, two extreme diversification patterns may be identified: one based on full exercise of available options (an assets-in-place diversification), and another aimed at seeding multiple growth options in subsequent businesses (options-based diversification). We propose an index to approximate the distance to these two diversification patterns and we explore its impact on firms’ value for a sample of U.S. firms during 1998-2010. We find that as a firm’s diversification approaches an options-based pattern, it becomes a more value-enhancing strategy.
PB Elsevier
SN ISSN: 0929-1199
YR 2017
FD 2017
LK http://uvadoc.uva.es/handle/10324/27516
UL http://uvadoc.uva.es/handle/10324/27516
LA eng
NO Journal of Corporate Finance, vol. 43, abril 2017, p. 316–339
NO Producción Científica
DS UVaDOC
RD 22-nov-2024