Earticle

초록

영어

The effects of corporate diversification on firm value have been extensively investigated in the field of finance. The conventional wisdom is that a diversification discount results from inefficient internal capital allocation. This paper suggests that it does not necessarily hold in a signaling game model in which the types of the firm can have a significant impact on the bankruptcy risk. Under information asymmetry, single firms invest only in projects with high net present values (NPVs) or fall into bankruptcy. By contrast, diversified firms with efficient internal capital markets invest in a broader set of projects with positive NPV. Consequently, this indicates that the average values of surviving single firms can be higher than that of a diversified firm. This study contributes to the literature in three ways. First, we show that under viable conditions, a diversification discount can occur even with efficient internal capital. Second, our study suggests a theoretical basis which takes into account survivor bias in gaining a better understanding of a diversification discount. Third, this study provides a means through which both diversification discount and premium can be explained within one framework.

목차

Abstract
 Ⅰ. Introduction
 Ⅱ. Literature Review
 Ⅲ. Assumptions and Examples
 Ⅳ. The Formal Model
  1. The Investment Strategy of a Single Firm
  2. Firm Value Comparison
 V. Conclusion
 References
 Appendix

키워드

저자

• Sunae Lee [ Associate Research Fellow, Korea Institute for Defense Analyses ] Corresponding Author
• S. Hun Seog [ Associate Professor, Business School, Seoul National University ]

참고문헌

발행기관

간행물

표지보기 관심저널 등록

• 간행물명

  재무연구 [Asian Review of Financial Research]

• 간기

  계간

• pISSN

  1229-0351

• eISSN

  2713-6531

• 수록기간

  1988~2026

• 등재여부

  KCI 등재,SCOPUS

• 십진분류

  KDC 325 DDC 330