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The Diversification Discount: Cash Flows Versus Returns
16 references·16 citing·41 second hopsampled
The Diversification Discount: Cash Flows Versus Returns (2001)The Diversification Discount: Cash Flows …The Dark Side of Internal Capital Markets: Divisional Rent‐Seeking and Inefficient Investment (2000)The Dark Side of Internal Cap…The Cost of Diversity: The Diversification Discount and Inefficient Investment (2000)The Cost of Diversity: The Di…Characteristics, Covariances, and Average Returns: 1929 to 1997 (2000)Characteristics, Covariances,…Cash Flow and Investment: Evidence from Internal Capital Markets (1997)Cash Flow and Investment: Evi…Agency Problems, Equity Ownership, and Corporate Diversification (1997)Agency Problems, Equity Owner…The Limits of Arbitrage (1995)The Limits of ArbitrageDiversification's effect on firm value (1995)Diversification's effect on f…Corporate focus and stock returns (1995)Corporate focus and stock ret…Tobin's q, Corporate Diversification, and Firm Performance (1994)Tobin's q, Corporate Diversif…Common risk factors in the returns on stocks and bonds (1993)Common risk factors in the re…Dividend Yields and Expected Stock Returns: Alternative Procedures for Inference and Measurement (1992)Dividend Yields and Expected …Do Managerial Objectives Drive Bad Acquisitions? (1990)Do Managerial Objectives Driv…A VARIANCE DECOMPOSITION FOR STOCK RETURNS (1990)A VARIANCE DECOMPOSITION FOR …Stock Prices, Earnings, and Expected Dividends (1988)Stock Prices, Earnings, and E…Asset pricing and the bid-ask spread (1986)Asset pricing and the bid-ask…Risk, Return, and Equilibrium: Empirical Tests (1973)Risk, Return, and Equilibrium…Does corporate diversification provide insurance against economic disruptions? (2019)Does corporate diversificatio…Redirecting Research Efforts on the Diversification–Performance Linkage: The Search for Synergy (2017)Redirecting Research Efforts …Internal control and internal capital allocation: evidence from internal capital markets of multi-segment firms (2016)Internal control and internal…D IRECTORS’ AND O FFICERS’ L IABILITY I NSURANCE AND F IRM V ALUE (2016)D IRECTORS’ AND O FFICERS’ L …Institutional investors as monitors of corporate diversification decisions: Evidence from real estate investment trusts (2013)Institutional investors as mo…Corporate Diversification and Firm Value: A Survey of Recent Literature (2012)Corporate Diversification and…Discretionary Accruals Quality, Cost of Capital, and Diversification (2011)Discretionary Accruals Qualit…Corporate diversification and earnings management (2011)Corporate diversification and…Uncertainty about average profitability and the diversification discount (2010)Uncertainty about average pro…Managerial hedging, equity ownership, and firm value (2009)Managerial hedging, equity ow…Do financial conglomerates create or destroy value? Evidence for the EU (2009)Do financial conglomerates cr…Knowledge and productivity in the world’s largest manufacturing corporations (2007)Knowledge and productivity in…Corporate governance and the spinoff decision (2006)Corporate governance and the …Biases in Decomposing Holding-Period Portfolio Returns (2006)Biases in Decomposing Holding…Merger Motives and Target Valuation: A Survey of Evidence from CFOs (2004)Merger Motives and Target Val…Wealth Effects of Diversification and Financial Deal Structuring: Evidence from REIT Property Portfolio Acquisitions (2003)Wealth Effects of Diversifica…CAPITAL ASSET PRICES: A THEORY OF MARKET EQUILIBRIUM UNDER CONDITIONS OF RISK* (1964)The Cross-Section of Expected Stock Returns (1992)On Persistence in Mutual Fund Performance (1997)Illiquidity and stock returns: cross-section and time-series effects (2002)A five-factor asset pricing model (2014)The relationship between return and market value of common stocks (1981)The theory and practice of econometrics (1986)Liquidity Risk and Expected Stock Returns (2003)Investor Sentiment and the Cross‐Section of Stock Returns (2006)Determinants of corporate borrowing (1977)Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers (1986)The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems (1993)Higher market valuation of companies with a small board of directors (1996)Investor Protection and Corporate Valuation (2002)Digital Business Strategy: Toward a Next Generation of Insights (2013)A model of investor sentiment /The Behavior of Stock-Market Prices (1965)Market Liquidity and Funding Liquidity (2008)THE VALUATION OF RISK ASSETS AND THE SELECTION OF RISKY INVESTMENTS IN STOCK PORTFOLIOS AND CAPITAL BUDGETS**This paper is another in a series of interrelated theoretical and statistical studies of corporate financial and investment policies being made under grants from the Rockefeller Foundation, and more recently the Ford Foundation, to the Harvard Business School. The generous support for this work is most gratefully acknowledged. The author is also much indebted to his colleagues Professors Bishop, Christenson, Kahr, Raiffa, and (especially) Schlaifer, for extensive discussion and commentary on an earlier draft of this paper; but responsibility for any errors or imperfections remains strictly his own.[Professor Sharpe's paper, “Capital Asset Prices: A Theory of Market Equilibrium Under Conditions of Risk” (Journal of Finance, September 1964) appeared after this paper was in final form and on its way to the printers. My first section, which parallels the first half of his paper (with corresponding conclusions), sets the algebraic framework for sections II, III and VI, (which have no counterpart in his paper) and for section IV on the equilibrium prices of risk assets, concerning which our results differ significantly for reasons which will be explored elsewhere. Sharpe does not take up the capital budgeting problem developed in section V below.] (1975)The Nature of the Firm (1937)Financing Constraints and Corporate Investment (1987)A Survey of Corporate Governance (1997)Enjoying the Quiet Life? Corporate Governance and Managerial Preferences (2003)Risk Reduction as a Managerial Motive for Conglomerate Mergers (1981)The Hubris Hypothesis of Corporate Takeovers (1986)Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature (2001)Markets and Hierarchies: Analysis and Antitrust Implications. (1976)A cross-firm analysis of the impact of corporate governance on the East Asian financial crisis (2002)Information Production and Capital Allocation: Decentralized versus Hierarchical Firms (2002)Financial and Legal Constraints to Growth: Does Firm Size Matter? (2005)Do Stock Prices Move Too Much to be Justified by Subsequent Changes in Dividends? (1980)Does the Stock Market Overreact? (1985)The Dividend-Price Ratio and Expectations of Future Dividends and Discount Factors (1986)The Dividend-Price Ratio and Expectations of Future Dividends and Discount Factors (1988)Investor Psychology and Asset Pricing (2001)The Efficient Market Hypothesis and Its Critics (2003)Stock Market Prices Do Not Follow Random Walks: Evidence from a Simple Specification Test (1988)Business conditions and expected returns on stocks and bonds (1989)Consumption, Aggregate Wealth, and Expected Stock Returns (2001)Have Individual Stocks Become More Volatile? An Empirical Exploration of Idiosyncratic Risk (2001)Presidential Address: Discount Rates (2011)
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References

  • 1993Common risk factors in the returns on stocks and bonds26,615 cited
  • 1973Risk, Return, and Equilibrium: Empirical Tests14,248 cited
  • 1995The Limits of Arbitrage5,282 cited
  • 1986Asset pricing and the bid-ask spread5,087 cited
  • 1995Diversification's effect on firm value3,069 cited
  • 1988Stock Prices, Earnings, and Expected Dividends2,457 cited
  • 1994Tobin's q, Corporate Diversification, and Firm Performance2,437 cited
  • 1990Do Managerial Objectives Drive Bad Acquisitions?1,912 cited
  • 1990A VARIANCE DECOMPOSITION FOR STOCK RETURNS1,822 cited
  • 2000The Cost of Diversity: The Diversification Discount and Inefficient Investment1,684 cited
  • 2000The Dark Side of Internal Capital Markets: Divisional Rent‐Seeking and Inefficient Investment1,556 cited
  • 1992Dividend Yields and Expected Stock Returns: Alternative Procedures for Inference and Measurement1,521 cited
  • 1997Agency Problems, Equity Ownership, and Corporate Diversification1,305 cited
  • 1997Cash Flow and Investment: Evidence from Internal Capital Markets1,143 cited
  • 2000Characteristics, Covariances, and Average Returns: 1929 to 19971,100 cited

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  • 1995Corporate focus and stock returns1,078 cited
  • Cited by

    • 2013Institutional investors as monitors of corporate diversification decisions: Evidence from real estate investment trusts138 cited
    • 2004Merger Motives and Target Valuation: A Survey of Evidence from CFOs128 cited
    • 2017Redirecting Research Efforts on the Diversification–Performance Linkage: The Search for Synergy127 cited
    • 2006Corporate governance and the spinoff decision121 cited
    • 2006Biases in Decomposing Holding-Period Portfolio Returns108 cited
    • 2009Managerial hedging, equity ownership, and firm value94 cited
    • 2007Knowledge and productivity in the world’s largest manufacturing corporations91 cited
    • 2010Uncertainty about average profitability and the diversification discount85 cited
    • 2009Do financial conglomerates create or destroy value? Evidence for the EU81 cited
    • 2012Corporate Diversification and Firm Value: A Survey of Recent Literature80 cited
    • 2016Internal control and internal capital allocation: evidence from internal capital markets of multi-segment firms71 cited
    • 2011Corporate diversification and earnings management69 cited
    • 2011Discretionary Accruals Quality, Cost of Capital, and Diversification67 cited
    • 2016D IRECTORS’ AND O FFICERS’ L IABILITY I NSURANCE AND F IRM V ALUE59 cited
    • 2019Does corporate diversification provide insurance against economic disruptions?58 cited
    • 2003Wealth Effects of Diversification and Financial Deal Structuring: Evidence from REIT Property Portfolio Acquisitions57 cited