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An empirical analysis of the determinants of corporate diversification

Authors Ding, Hongbo
Issue Date 2000
Summary While previous studies have examined the equilibrium number of segments and the effects of diversification on market prices and operating performances, this paper aims to identify ex ante managerial incentives behind corporate diversification in a sample of non-monopolist firms. I try to use accounting data to measure those incentives. Generally speaking, for the non-monopolist sample, firms that undertake diversifying activities have smaller market power, lower leverage ratios, poorer operating performances (as measured by ROAs), smaller sizes, fewer growth opportunities and have experienced more rapid growth in sales in the past three years. Also, firms are more likely to diversify if they rely more heavily on accounting-based performance measures, as opposed to market-based measures, in determining management compensation.
Note Thesis (M.Phil.)--Hong Kong University of Science and Technology, 2000
Language English
Format Thesis
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