✦ LIBER ✦

Does corporate ownership structure affect its strategy towards diversification?

✍ Scribed by Yakov Amihud; Baruch Lev

Publisher: John Wiley and Sons
Year: 1999
Tongue: English
Weight: 51 KB
Volume: 20
Category: Article
ISSN: 0143-2095
DOI: 10.1002/(sici)1097-0266(199911)20:11<1063::aid-smj69>3.0.co;2-s

No coin nor oath required. For personal study only.

✦ Synopsis

We claim that there is a link between corporate control structure and managers' strategy towards unrelated mergers and risk diversification. Companies with greater ownership concentration are less diversified. Evidence also shows that corporate diversification generally results in value loss while focussing is value increasing. This highlights the potentially detrimental effect of agency problems on corporate strategy.

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