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Título
Does it really matter how a firm diversifies? Assets-in-place diversification versus options-based diversification
Año del Documento
2017
Editorial
Elsevier
Descripción
Producción Científica
Documento Fuente
Journal of Corporate Finance, vol. 43, abril 2017, p. 316–339
Résumé
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.
Materias (normalizadas)
Empresas-Finanzas
Palabras Clave
Corporate Finance
Corporate diversification
growth opportunities
firm value
investment strategy
self-selection
ISSN
ISSN: 0929-1199
Revisión por pares
SI
Patrocinador
Financial support was received from the Spanish Ministry of Education (FPU Programme), the Regional Government of Castilla y León (Ref. VA 260 U14), the Regional Government ofMadrid and European Social Fund (Ref. EARLYFIN, S2015/HUM-3353), and the Spanish Ministry of Economy and Competitiveness (Ref. ECO2014-56102-P and ECO2016-77631-R)
Propietario de los Derechos
The authors (Pablo de Andrés, Gabriel de la Fuente and Pilar Velasco)
Idioma
eng
Derechos
openAccess
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