The Diversification Discount

Diversification Relatedness and Economic Performance: Does the Resource Plasticity Channel Matter?

“…However, empirical findings on the relationship between the level of diversification and performance seems to be sensitive to choices concerning performance measures, sample choice, sampling period, variable specification, method of analysis, firms' characteristics, industry affiliation, and the effectiveness and efficiency of allocative features of, e.g., the financial and legal systems (e.g., Ahn, 2011;Çolak, 2010;Fauver et al, 2003).…”

Firm Diversification and Performance: An Empirical Examination

“…We exclude very small firms from our estimation sample, whose ownership and financial data may miss and may cause bias.26 Compared with previous studies, our sample, in general, focuses on an increased number of business groups, and is also based on a longer period (e.g., La Rocca et al 2018; George and Kabir 2012;Kim et al 2004;Khanna and Palepu 2000;Chatterjee and Wernerfelt 1991;Varadarajan and Ramanujam 1987;Montgomery 1985;Palepu 1985;Lecraw 1984). 27 Since larger firms can take more advantage from, e.g., economies of scale and, ceteris paribus, be more profitable, size and tangibility of a firm may have a positive impact on a firm's performance level. Due to the trade-off between tax shields and bankruptcy costs, leverage may have a negative relationship with accounting measures of performance and a positive relationship with market measures (see, e.g.,George and Kabir 2012;Khanna and Palepu 2000).…”