Two Sides of a Coin: Endogenours and Exogenous Effects of Corporate Diversification on Firm Value
We investigate the value effects of two types of corporate diversification - unexpected exogenous diversification and endogenous diversification. Combining Heckman's sample-selection estimator with a two-stage least squares estimator and a generalized method of moments instrumental variables estimator to control for both endogeneity and sample-selection bias, we find that while an unexpected increase in diversification caused by exogenous shocks destroys firm value, an endogenous increase in...[Show more]
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|Source:||International Review of Finance|
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