Debt, diversification, and valuation

被引：29

作者：

Ruland W. ^{[1
]}

Zhou P. ^{[1
]}

机构：

[1] Zicklin School of Business, Baruch College, City University of New York

来源：

Review of Quantitative Finance and Accounting | 2005年 / 25卷 / 3期

关键词：

Debt; Diversification; Leverage; Valuation;

D O I：

10.1007/s11156-005-4768-0

中图分类号：

学科分类号：

摘要：

The separate associations between financial leverage and valuation and between diversification and valuation have been widely researched. The joint function of leverage, diversification, and valuation, however, has received much less attention. Previous research shows that compared to specialized firms, diversified firms tend to have higher free cash flows and fewer high net present value investment opportunities. Consequently, the agency costs associated with potential overinvestment are greater for diversified firms. The literature also proposes that financial leverage should reduce agency costs. Consequently, we expect that the values of diversified firms increase with leverage. Our tests provide strong support for the hypothesis that the values of diversified firms increase with leverage. This tendency is not observed for specialized firms. © 2005 Springer Science + Business Media, Inc.

引用

页码：277 / 291

页数：14

共 14 条

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