Abstract

http://ssrn.com/abstract=217869
 
 

References (41)



 
 

Citations (46)



 
 

Footnotes (28)



 


 



Both Sides of Corporate Diversification: The Value Impacts of Geographic and Industrial Diversification


Gordon M. Bodnar


Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS)

Joseph Weintrop


City University of New York - Baruch College - Stan Ross Department of Accountancy

Charles Tang


Pace University - Lubin School of Business

December 1999


Abstract:     
This paper examines the effect of geographic and industrial diversification on firm value for a sample of over 31,000 firm-year observations of U.S. corporations from 1984 - 1997. Consistent with the predictions of most theories, we find the value of a firm with international operations is 2.7% higher than a comparable single-activity domestic firm, while the value of a multiactivity firm is 6.0% lower than a comparable portfolio of single-activity domestic firms. In addition, we demonstrate the existence of an omitted variable bias in estimating the value effect of industrial diversification when failing to account for geographic diversification when estimating. Sources of the value effects of both dimensions of diversification are also investigated.

Number of Pages in PDF File: 37

JEL Classification: F30, G12

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Date posted: April 20, 2000  

Suggested Citation

Bodnar, Gordon M. and Weintrop, Joseph and Tang, Charles, Both Sides of Corporate Diversification: The Value Impacts of Geographic and Industrial Diversification (December 1999). Available at SSRN: http://ssrn.com/abstract=217869 or http://dx.doi.org/10.2139/ssrn.217869

Contact Information

Gordon M. Bodnar (Contact Author)
Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS) ( email )
1740 Massachusetts Avenue, NW
Washington, DC 20036
United States
202-663-7731 (Phone)
202-663-7718 (Fax)
Joseph Weintrop
City University of New York - Baruch College - Stan Ross Department of Accountancy ( email )
One Bernard Baruch Way, Box B12-225
New York, NY 10010
United States
212-802-6443 (Phone)
212-802-6423 (Fax)
Charles Ya B. Tang
Pace University - Lubin School of Business ( email )
1 Pace Plaza
New York, NY 10038-1502
United States
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References:  41
Citations:  46
Footnotes:  28

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