I examine how industry concentration affects the value of diversification and explore the strategic value of agency problems for conglomerates that operate mainly in concentrated industries (concentrated conglomerates). I find that concentrated conglomerates have higher diversification values....

This paper uses the staggered adoption of state-level antitakeover laws to provide causal evidence on whether managerial agency problems affect the allocative efficiency of conglomerate firms. Increases in control slack lead to sharp declines in the Q-sensitivity of investment. The effects are...