In this Paper we show that the main empirical findings about firm diversification and performance are actually … consistent with the optimal behavior of a firm that maximizes shareholder value. In our model, diversification allows a firm to … allows us to examine several aspects of the relationship between firm diversification and performance in a very general …

This work presents an equilibrium model of diversification through merger formation. Due to moral hazard problems … interest and non-interest terms of credit). Furthermore, the model offers a rationale for diversification that is immune to the … diversification neutrality result and furthermore, explains why diversified companies trade at a discount relative to their non …

We construct an equilibrium model of firm diversification to show that the main empirical findings about firm … diversification and performance are consistent with the maximization of shareholder value. In our model, diversification allows a firm … to explore better productive opportunities while taking advantage of synergies. By explicitly linking the diversification …

trade-off between conglomerate and specialization strategies of firms, yielding testable predictions on the relationship …

optimal financial contract. Our results are consistent with empirical findings showing that conglomerate firms trade at a …

that financial development has important consequences for efficiency and specialization (or diversification) of investments …

whether to take the firm public. In this decision, the entrepreneur trades off diversification benefits of going public …