Diversification's effect on firm value

Berger, Philip G.; Ofek, Eli

doi:10.1016/0304-405x(94)00798-6

Cited by 2,643 publications

(2,791 citation statements)

References 23 publications

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“…Similar with the evidence reported by Berger and Ofek (1995) and Rajan, Servaes, and Zingales (2000), LnSize enters the q regression with a significantly positive coefficient for both REITs and non-financial firms. In line with the evidence reported by Berger and Ofek (1995), we find that Profitability enters the regression with a positively significant coefficient for REITs, but is insignificantly negative for non-financial firms, a finding that is also reported by Berger and Ofek (1995). Finally, Earning…”

Section: Table IV Heresupporting

confidence: 79%

Collateral and the Limits of Debt Capacity: Theory and Evidence

Giambona

Mello

Riddiough³

2012

SSRN Journal

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Section: Table IV Heresupporting

confidence: 79%

Collateral and the Limits of Debt Capacity: Theory and Evidence

Giambona

Mello

Riddiough³

2012

SSRN Journal

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“…Thus, the economic rationale of business groups is determined by the relative efficiency of internal versus external markets and is a function of institutional development (Khanna and Palepu, 1997, 2000a, 2000b. As external markets develop and become increasingly efficient over time, the relative importance of internal markets declines, and costs of building and maintaining internal capital markets come to outweigh associated benefits (Berger and Ofek, 1995;Lang and Stulz, 1994). However, to understand the trade-offs between internal and external markets, a consideration of different organizational forms is in order.…”

Section: Institutional Perspectivementioning

confidence: 99%

The Evolution and Restructuring of Diversified Business Groups in Emerging Markets: The Lessons from Chaebols in Korea

Kim

Hoskisson

Tihanyi

et al. 2004

Asia Pacific Journal of Management

146

115

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Abstract. This paper proposes an evolutionary model of business groups in emerging economies by tracing the evolution and restructuring of business groups in Korea. Underlying our model are two theoretical premises: (1) the value-creation potential of business group diversification depends on the quality of the economic institutions supporting the economy; and (2) the strategy-structure fit is a key determinant of diversified business groups' performance. Combining these two premises, we link business group evolution with institutional context, sources of competitive advantages, diversification strategy, and structure. To illustrate our theoretical arguments, we provide an overview of the evolution of chaebols in Korea and examine the restructuring of two major business groups, LG and Hyundai Motor. We conclude by discussing implications for management, public policy, and future research.

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“…More sophisticated diversi…cation measures, based on industry codes, are the concentric index (Caves et al, 1980 andWernerfelt andMontgomery, 1988) and the entropy measure (Berry, 1974;Jacquemin andBerry, 1979 andPalepu, 1985), that have been used in many empirical works on diversi…cation (e.g. Morck et al, 1990 andBerger andOfek, 1995).…”

Section: Complementarity Indexmentioning

confidence: 99%

Integration contracts and asset complementarity: Theory and evidence from US data

Giannatale

Passarelli

2018

International Journal of Industrial Organization

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Firms sign an integration contract with the purpose of increasing their expected pro…ts from trade and competition with third parties. Gains depend on how the contract improves the partners' production function (e.g. better synergies, organization, etc.), and how it increases their power in the marketplace.We investigate three bilateral integration contracts under di¤erent ownership allocations over resources: M&A, Minority Stake purchase and Joint Venture. We study them theoretically with a cooperative game approach. We derive some pro…tability conditions that we test empirically on a sample of about 9000 US …rms. In order to estimate the link between ownership, asset complementarity and pro…ts over time, we propose a novel multiproduct and time-varying complementarity index. Empirical results fully support our theoretical predictions.

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Diversification's effect on firm value

Cited by 2,643 publications

References 23 publications

Collateral and the Limits of Debt Capacity: Theory and Evidence

Collateral and the Limits of Debt Capacity: Theory and Evidence

The Evolution and Restructuring of Diversified Business Groups in Emerging Markets: The Lessons from Chaebols in Korea

Integration contracts and asset complementarity: Theory and evidence from US data

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