Is there a diversification discount in financial conglomerates?
By: Luc Laeven, Ross Levine.
Contributors: Levine, Ross.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11499; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11499.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Bank mergers.; Diversification in industry.; Consolidation and merger of corporations.
Description: "This paper investigates whether the diversity of activities conducted by financial institutions influences their market valuations.  We find that there is a diversification discount: The marketvalues financial conglomerates that engage in multiple activities, e.g., lending and non-lending financial services,lower than if those financial conglomerates were broken into financial intermediaries that specialize in the individual activities.  While difficult to identify a single causalfactor, the results are consistent with theories that stress intensified agency problems infinancial conglomerates that engage in multiple activities and indicate that economies of scope arenot sufficiently large to produce a diversification premium"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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Mode of access: World Wide Web.