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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.JEL classification: L25, G32, D22, C34

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El acceso a la versión del editor puede requerir la suscripción del recurso Access to the published version may require subscription This paper provides empirical evidence of how a firm's growth opportunities shape the diversification-value relationship on a sample of U.S. companies between 1998 and 2010. Our findings suggest that the negative relationship between diversification and a firm's value may reverse at high levels of diversification, and that such a U-form diversification-value relation is partly mediated by a firm's growth opportunities. Results are robust to various model specifications and after controlling for endogenous self-selection of the diversification decision.