Abstract

http://ssrn.com/abstract=2160846
 
 

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Product Market Uniqueness and Stock Market Valuations


Gerard Hoberg


University of Maryland - Department of Finance

Gordon M. Phillips


University of Southern California; National Bureau of Economic Research (NBER)

January 21, 2014


Abstract:     
We examine whether stock market valuations of different firm organizational forms reflect firm uniqueness relative to industry peers. We measure uniqueness relative to peer-firm replicas of each firm constructed from firm 10-K product descriptions and accounting data. We find that firms have higher stock market valuations than matched industry peer firms when their firm product portfolios are more unique. This result holds for both conglomerate and focused single-segment organizational forms. Increased success in patenting, increased branding, and less venture capital financed entry into the firm's product space all contribute to the long-term maintenance of uniqueness and thus higher valuations. Overall, our findings show that the stock market values firm uniqueness and recognizes peer groups based on fundamental product characteristics that are not reflected in standard peer groupings.

Number of Pages in PDF File: 49

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Date posted: October 13, 2012 ; Last revised: January 22, 2014

Suggested Citation

Hoberg, Gerard and Phillips, Gordon M., Product Market Uniqueness and Stock Market Valuations (January 21, 2014). Available at SSRN: http://ssrn.com/abstract=2160846 or http://dx.doi.org/10.2139/ssrn.2160846

Contact Information

Gerard Hoberg (Contact Author)
University of Maryland - Department of Finance ( email )
Robert H. Smith School of Business
Van Munching Hall
College Park, MD 20742
United States
HOME PAGE: http://www.rhsmith.umd.edu/finance/faculty/hoberg.aspx
Gordon M. Phillips
University of Southern California ( email )
Marshall School of Business
Los Angeles, CA 90089
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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References:  32
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