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 …

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 …

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 …

assets - and Markowitz - who advocates diversification across assets. We rely on the concepts of ambiguity and ambiguity …

We study IPOs by focusing on the degree of portfolio diversification of the shareholders taking the company public. We … detailed at the stock level, for both private and public companies. We construct several proxies for portfolio diversification … predicted, the degree of diversification explains a significant (economically and statistically) part of the probability of …

-spreading (diversification) that the economy can achieve. The desire to avoid highly risky investments slows down capital accumulation and the … equilibrium is inefficient because individuals do not take into account their impact on the diversification opportunities of …

We study empirically the effect of focus (specialization) versus diversification on the return and the risk of banks …) focus and diversification using a unique data set that is able to identify individual bank loan exposures to different … expansion into newer or competitive industries. We find that industrial loan diversification reduces bank return while …