Does Diversification Cause the "Diversification Discount"?
نویسندگان
چکیده
Using recent econometric developments about causal inference, I examine whether diversification destroys value. I estimate the value effect of diversification by matching diversifying and single-segment firms on their propensity score-the predicted values from a probit model of the propensity to diversify. I also use Heckman 's (1979) two-stage estimator for comparison purposes. Ifind that on average, diversification does not destroy value. This finding is robust to the choice of estimator, sample, measures of excess value, and specification.
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