Tobin's q, Corporate Diversification, and Firm Performance

Stulz, René M.

doi:10.1086/261970

Cited by 1,914 publications

(125 citation statements)

References 21 publications

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“…For knowledge-based resources, first, intangible resources were calculated in two ways: Approximate Tobin's Q was used (Lang and Stulz 1994;Villalonga 2004) to show the total amount of intangible assets within the company, and two ratios were used to assess types of intangible resources (technological-R&D expenditure/sales-and commercial-commercial and administrative expenses/sales) (Chatterjee and Singh 1999;Chatterjee and Wernerfelt 1991;Mahoney and Pandian 1992). For the two ratios, since data for all the deals within the sample was not available, a sub sample (441 deals) was used which included only the deals where this information was available.…”

Section: Method: Sample and Measuresmentioning

confidence: 99%

The Decision to Use Alliances as Corporate Entrepreneurship: The Role of Resources and Skills

Montoro‐Sánchez

Ortiz‐de‐Urbina‐Criado

Romero‐Martínez

2008

Group Decis Negot

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This aim of this research is to analyse the role of firm resources and skills in the decision to cooperate as a method for developing entrepreneurial activity. We use a sample of 967 entrepreneurial operations undertaken between 2000 and 2004 by 323 EU-15 companies. Results suggest that skills are more important than resources when choosing how to undertake an entrepreneurial activity. While experience in cooperation and possession of technological resources make the choice of an alliance more probable, experience in entrepreneurial activities and possession of physical resources may lead the company to opt for other alternatives.

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Section: Method: Sample and Measuresmentioning

confidence: 99%

The Decision to Use Alliances as Corporate Entrepreneurship: The Role of Resources and Skills

Montoro‐Sánchez

Ortiz‐de‐Urbina‐Criado

Romero‐Martínez

2008

Group Decis Negot

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“…C orporate diversification was popularized by conglomerates in the 1960s and the 1970s (Lang and Stulz 1994). Diversification has been posited to result in synergies enabling the single diversified entity to achieve greater efficiencies through cooperation and better risk management, utilize existing firm-specific assets that cannot be traded away, and share core competencies efficiently across divisions to create economies of scale (Markides 2001, 109-110).…”

Section: Introductionmentioning

confidence: 99%

“…However, the evidence on the impact of diversification on firm value is mixed. In the 1990s, there was strong consensus that diversification destroyed firm value (Lang and Stulz 1994;Berger and Ofek 1995;Servaes 1996). These studies found that diversified firms trade at a discount to the sum of the value of their components.…”

Section: Introductionmentioning

confidence: 99%

A Re-Examination of Diversification and Firm Productivity

Chang

Fernando

Srinivasan

et al. 2013

Journal of Management Accounting Research

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The advantages and disadvantages of diversification have been widely debated by academics, as well as business professionals, and the majority of studies suggest that diversification destroys firm value. The effect of overall diversification (without categorizing whether such diversification is related or unrelated to the business) on productivity has been investigated as well, but with similar conflicting results. In this paper, we investigate the effects of the two types of diversification on productivity. We find that related diversification enhances firm productivity, whereas unrelated diversification reduces firm productivity. We also find that the previously recorded link between diversification and firm value is partially mediated by productivity. Our paper offers further empirical evidence toward resolving the conflicting findings of prior research, and provides practitioners with additional points for consideration when engaging in firm diversification.

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“…Yermack backed consisted with the earlier hypothesis suggested by Lipton & Lorsch (1992) and Jensen (1993). The regression measure used by Yermack was based on earliest techniques used by Morck, Shleifer, and Vishny (1988), Weisbach (1991), andLang andStulz (1994). ISSN 1941-899X 2012 However, when we consider the fact that large diversified company will have large board as these firms will frequently engage in merger & acquisition activities, which may make the findings of regression analysis bias.…”

Section: Perspectives On Market Valuation Of Firms With Small Board Sizementioning

confidence: 99%

Examination of Theoretical and Empirical Studies on Firm’s Performance in Relation to its’ Board Size: A Study of Small and Medium Size Public Firms

Sheikh¹,

Khan²,

Iqbal³

et al. 2012

jmr

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This research presented a review of key theoretical and empirical studies on firm's performance and its board size. The review included on small & medium sized and public owned firms from manufacturing to financial sectors. The research concludes that the evidence on positive or negative correlation between board size and a firm's performance is mixed (inconclusive) and need for further empirical investigation on this subject is warranted. It was found that the choice of optimal board size can vary in one firm to other, depending on nature of business operations, i.e. for high debt-financed firms with high advisory requirements may require large board to advise CEO on complex matters, as does the banking and saving & loans holding companies where more of expert advice, diversified opinions, professional skills are needed. Also, the firms with poor operating performance may increase their board size as one of their strategy to improve profitability given that new board members will contribute in the form of increased networking, skills, opinion and expert advice.

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Tobin's q, Corporate Diversification, and Firm Performance

Cited by 1,914 publications

References 21 publications

The Decision to Use Alliances as Corporate Entrepreneurship: The Role of Resources and Skills

The Decision to Use Alliances as Corporate Entrepreneurship: The Role of Resources and Skills

A Re-Examination of Diversification and Firm Productivity

Examination of Theoretical and Empirical Studies on Firm’s Performance in Relation to its’ Board Size: A Study of Small and Medium Size Public Firms

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