Product market competition and the value of diversification

Cansu Iskenderoglu

Finance Research Letters, 2023, vol. 58, issue PA

Abstract: I examine how industry concentration affects the value of diversification. I find that con- glomerates that operate mainly in concentrated industries (concentrated conglomerates) have higher diversification values. Using tariff reductions as competitive shocks, I show that concentrated conglomerates experience significant decline in their valuations and respond aggressively to threats in less-competitive industries.

Keywords: Diversification; Diversification discount; Product market competition; Tariff reduction (search for similar items in EconPapers)
JEL-codes: D23 G18 G32 G34 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pa:s154461232300421x

DOI: 10.1016/j.frl.2023.104049

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