The valuation discount of multi‐segment firms in Australia

Grant Fleming, Barry Oliver and Steven Skourakis

Accounting and Finance, 2003, vol. 43, issue 2, 167-185

Abstract: This paper refines the Berger and Ofek (1995) methodology to estimate the valuation discount of multi‐segment firms in Australia between 1988 and 1998. Evidence is found that based on earnings before tax, the sample of multi‐segment firms traded at a 29 per cent greater discount than a comparable portfolio of single segment firms over the sample period. To explain the results further analysis shows that the valuation discount was driven by poorly performing multi‐segment firms rather than multi‐segment firms per se. This raises questions about studies that conclude that diversification is value destroying.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:bla:acctfi:v:43:y:2003:i:2:p:167-185

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