Banks and other financial intermediaries tend to specialize in market segments where they exercise a competitive advantage. Whereas specialization facilitates banks to benefit from market conditions or their expertise, specialization may be accompanied by concentration of resources in counterparties, regions, industry sectors, or business products, compromising banks’ diversification of their s...

We test the relation between ambiguity aversion and five household portfolio choice puzzles: nonparticipation in equities, low allocations to equity, home-bias, own-company stock ownership, and portfolio under-diversification. In a representative US household survey, we measure ambiguity preferences using custom-designed questions based on Ellsberg urns. As theory predicts, ambiguity aversion i...

The impact of capital mobility restrictions on the diversification benefit for risk at the group level of a financial conglomerate is an important aspect in risk management. In this paper we propose a new bottom-up approach for realizing diversification benefits using some predetermined capital and risk transfer instruments, taking counter-party default risk into account.

Decision support systems are generally geared to short-term tactical decision makkrg. As an alternative, this paper develops a mathematical progrming model to evaluate long-term strategic alternatives in the context of farm-level agricultural production where a broiler farm considers long-term implications of diversification into commercial aquiculture. The model considers a ten-year strategic ...

This paper investigates the valuation effects of corporate international diversification by examining cross-border mergers and acquisitions of U.S. acquirers over the period 1990-1999. We find that, on average, acquisitions of “fairly valued” foreign business units do not lead to value discounts. Consistent with the industrial diversification discount literature, unrelated cross-border acquisit...

Livestock producers’ operational perspectives and characteristics are known to be associated with silvopasture adoption, but findings in the literature mixed contradictory. To study whether or more closely relate interest, 307 livestock producers enrolled cost-share programs Virginia, United States of America were surveyed. One hundred thirty-nine responded (rate = 45%). Interest was measured u...

Total Quality Management (TQM) is periodically lambasted by management gurus and the business media for its supposedly lackluster impact on financial performance. This paper presents objective evidence on whether this criticism is indeed justified. The evidence is based on a study of nearly 600 quality award winners. Three critical issues are addressed in this paper. First, we discuss the ongoi...

This paper argues that in environments that exhibit non-convexities, risk diversification by financial institutions may be socially inefficient. To this end, we study a stylized, micro-founded model in which individual banks have an incentive to hold diversified portfolios in order to minimize the likelihood of bank runs. Yet, at the same time, diversification may increase the aggregate risk fa...

Portfolio diversification and active risk management are essential parts of financial analysis which became even more crucial (and questioned) during and after the years of the Global Financial Crisis. We propose a novel approach to portfolio diversification using the information of searched items on Google Trends. The diversification is based on an idea that popularity of a stock measured by s...

The allocation problem stems from the diversification effect observed in risk measurements of financial portfolios: the sum of the “risks” of many portfolios is larger than the “risk” of the sum of the portfolios. The allocation problem is to apportion this diversification advantage to the portfolios in a fair manner, yielding, for each portfolio, a risk appraisal that accounts for diversificat...