Why Investors Sometimes Value Size and Diversification: The Internalization Theory of Synergy

Randall Morck and B. Yeung

Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: For most firms, size and diversification are correlated with lower value. However, for firms possessing substantial information-based asset, geographical diversification, line of business diversification, and growth in general, add value. This is consistent with information-based assets being a critical prerequisite for synergy, as postulated in internalization theories of synergy.

Keywords: ENTERPRISES; SYNERGY; INVESTMENTS (search for similar items in EconPapers)
JEL-codes: F23 O10 O16 (search for similar items in EconPapers)
Pages: 40 pages
Date: 1997
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:mie:wpaper:411

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