학회소식
[2004년 제 2차] Corporate Governance, Shareholder Rights and Firm D
작성자 : 관리자
조회수 : 1004
게시일 :
2004-05-25
We explore agency theory as an explanation for the diversification discount. The empirical evidence reveals that firms where shareholder rights are more suppressed by restrictive corporate governance suffer a deeper diversification discount. Specifically, we document a 2% decline in firm value for each additional governance provision imposed on shareholders. Moreover, the strength of shareholder rights is found to be inversely related to the probability to diversify. An explicit distinction is made between global and industrial diversification. Our results support agency theory as an explanation for the value reduction in diversified firms. The evidence in favor of agency theory appears to be unambiguous for industrial diversification but less so for global diversification.
