Diversification's effect and manager experience on investment efficiency

Hsiao-Fen Hsiao, Jinquan Tang and Conghua Wen

Economic Analysis and Policy, 2024, vol. 81, issue C, 890-900

Abstract: This paper discusses whether diversification is the optimal business strategy for a firm and whether diversification leads to efficient fund allocation. The analysis reveals that bad divisions in diversified firms exhibits over-investment with higher investment levels than ineffective specialized firms. Meanwhile, good divisions of diversified firms shows lower investment levels than effective specialized firms.

Keywords: Diversification; Manager experience; Overinvestment; Underinvestment; Fund allocation (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:81:y:2024:i:c:p:890-900

DOI: 10.1016/j.eap.2024.01.009

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