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Product Market Uniqueness, Organizational Form 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)

August 31, 2014

We introduce a new framework for forming peer firm portfolios that can account for firm uniqueness and organizational form. Our new vocabulary-based peer firm portfolios explain much cross sectional dispersion in firm valuations and generate a direct measure of firm product market uniqueness. We find that firms have higher stock market valuations than their peers when their products are more unique. This result holds for 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.

Number of Pages in PDF File: 45

Keywords: stock market valuations, organizational form, conglomerate firms, uniqueness

JEL Classification: D23, G31, G32

working papers series

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Date posted: October 13, 2012 ; Last revised: September 1, 2014

Suggested Citation

Hoberg, Gerard and Phillips, Gordon M., Product Market Uniqueness, Organizational Form and Stock Market Valuations (August 31, 2014). Available at SSRN: http://ssrn.com/abstract=2160846 or http://dx.doi.org/10.2139/ssrn.2160846

Contact Information

Gerard Hoberg
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 (Contact Author)
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
Citations:  2
Footnotes:  9

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