DO CONGLOMERATES OPERATE MORE EFFICIENTLY THAN SINGLE-SEGMENT FIRMS?

Nilabhra Bhattacharya, Johan Sulaeman and Jeff Yu
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Nilabhra Bhattacharya: Southern Methodist University, United States
Johan Sulaeman: Department of Finance, NUS Business School, National University of Singapore. 15 Kent Ridge Drive, Singapore 119245

The Singapore Economic Review (SER), 2020, vol. 65, issue 05, 1237-1270

Abstract: We investigate the impact of organizational form on operational efficiency using a large sample covering manufacturing and non-manufacturing sectors in the United States over 30 years. We quantify operational efficiency using various measures, and find robust evidence that segments of diversified firms are operationally more efficient than their single-segment industry peers. The difference is more noticeable in industries where financing needs are high due to greater growth potential and where access to external markets is constrained due to higher information asymmetry.

Keywords: Conglomerates; efficiency (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S0217590819400046

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