Value, Survival, and the Evolution of Firm Organizational Structure

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dc.contributor.authorBorghesi, Richard A.
dc.contributor.authorHouston, Joel
dc.contributor.authorNaranjo, Andy
dc.date.accessioned2006-08-30T10:06:37Z
dc.date.available2012-02-24T10:07:21Z
dc.date.issued2005-08
dc.descriptionResearch Enhancement Program Final Report
dc.description.abstractWe examine corporate product diversification as a dynamic process. Consistent with prior research, we find that the average diversification discount is about 8% when using the standard value-multiple approach. However, we find that a significant portion of the observed diversification discount arises from benchmark comparisons of value ratios of mature firms (which are more likely to have low value multiples and to be diversified) with those of very young firms (which are more likely to have extremely high value multiples and to be focused). The magnitude of the diversification discount falls significantly when we control for firm age. We also show that diversification reduces the mortality rate of firms, and we provide evidence that mature firms pursue diversification strategies in part as a means to exit stagnant business segments in favor of industries that are more highly valued. Our results suggest that diversification can be an optimal firm evolutionary response to external pressures.
dc.description.departmentSponsored Programs
dc.formatText
dc.format.extent1 page
dc.format.medium1 file (.pdf)
dc.identifier.citationBorghesi, R. A. (2005). <i>Value, survival, and the evolution of firm organizational structure</i>. Research Enhancement Program, Texas State University, San Marcos, TX.
dc.identifier.urihttps://hdl.handle.net/10877/2932
dc.language.isoen
dc.subjectorganizational value
dc.subjectorganizational survival
dc.subjectorganizational evolution
dc.subjectfirms
dc.subjectorganizational structure
dc.titleValue, Survival, and the Evolution of Firm Organizational Structure
dc.typeReport

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