Business, Management and Accounting
5 years ago

Corporate diversification boosts firm value post-crisis, balancing specialization key.

The Effect of Corporate Diversification on Firm Value:In the Presence of Financial Crisis
Li Zhi

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The study looked at how diversification affects a company's value before and after a financial crisis. They found that diversified companies were valued lower before the crisis, but this changed to a positive value after the crisis. The value of diversified companies increased significantly after correcting for certain issues. However, there was no clear difference in value between companies that diversified into related or unrelated areas. This suggests that companies should balance diversification and specialization, especially during a recession.