|Author Name||USHIJIMA Tatsuo (Aoyama Gakuin University)|
|Creation Date/NO.||February 2015 15-E-019|
|Research Project||Frontiers of Analysis on Corporate Governance: Growth, value creation and corporate governance|
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Because corporate diversification and organization co-evolve, diversification discounts, which are widely reported in the literature, can be caused by organizational structure, rather than by the industrial scope of the firm. The paper examines this possibility based on a large sample of Japanese firms for which the legal (parent-subsidiary) structure of the organization is easily observable. I identified a significant discount for diversified firms with and without control over the organizational structure. I also found that firms with a legally segmented structure (e.g., holding companies) are deeply discounted. My results suggest that both diversification and organization are important determinants of firm value.
Published: Tatsuo Ushijima, 2016. "Diversification, Organization, and Value of the Firm," Financial Management, Vol. 45(2), pp.467-499