Institutional ownership affects how diversified firms are valued and how risky they are. Global single-segment firms are valued more than industrially-diversified firms. Having stable institutional investors increases a firm's likelihood of being diversified. Diversified firms have higher institutional ownership proportions and lower idiosyncratic risk. The more institutional investors a diversified firm has, the higher its value and the lower its risk. However, if institutional ownership is volatile, the firm's value decreases but its risk increases. Overall, having stable institutional investors benefits diversified firms by increasing their value.