Dissecting Conglomerate Valuations
ABSTRACT We develop a new method to estimate Tobin's Qs of conglomerate divisions without relying on standalone firms. Divisional Qs differ considerably from those of standalone firms across industries, over time, and in their sensitivity to economic shocks. The differences are explained by int...
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| Veröffentlicht in: | The Journal of finance (New York) 2022-04, Vol.77 (2), p.1097-1131 |
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| container_end_page | 1131 |
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| container_title | The Journal of finance (New York) |
| container_volume | 77 |
| creator | BOGUTH, OLIVER DUCHIN, RAN SIMUTIN, MIKHAIL |
| description | ABSTRACT
We develop a new method to estimate Tobin's Qs of conglomerate divisions without relying on standalone firms. Divisional Qs differ considerably from those of standalone firms across industries, over time, and in their sensitivity to economic shocks. The differences are explained by intraconglomerate covariance structures and access to internal capital markets that mitigate external financing frictions. Consequently, the Qs capture variation in the allocation of assets in the economy: within firms through internal capital markets and across focused and diversified firms through diversifying acquisitions. Overall, our method provides opportunities to study the economic mechanisms that explain corporate diversification. |
| doi_str_mv | 10.1111/jofi.13117 |
| format | Article |
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We develop a new method to estimate Tobin's Qs of conglomerate divisions without relying on standalone firms. Divisional Qs differ considerably from those of standalone firms across industries, over time, and in their sensitivity to economic shocks. The differences are explained by intraconglomerate covariance structures and access to internal capital markets that mitigate external financing frictions. Consequently, the Qs capture variation in the allocation of assets in the economy: within firms through internal capital markets and across focused and diversified firms through diversifying acquisitions. Overall, our method provides opportunities to study the economic mechanisms that explain corporate diversification.</description><identifier>ISSN: 0022-1082</identifier><identifier>EISSN: 1540-6261</identifier><identifier>DOI: 10.1111/jofi.13117</identifier><language>eng</language><publisher>Cambridge: Blackwell Publishers Inc</publisher><subject>1978-2018 ; Asset allocation ; Business valuation ; Capital markets ; Companies ; Conglomerates ; Diversification ; Diversifikation ; Economic shock ; Interner Kapitalmarkt ; Konglomerat ; Korrelation ; Schätzung ; Tobins Q ; USA</subject><ispartof>The Journal of finance (New York), 2022-04, Vol.77 (2), p.1097-1131</ispartof><rights>2022 the American Finance Association</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c3917-f674dbbcbaa2aec8000862b9f085963e5802ef4b5e1ab7285cd2041d933404d63</citedby><cites>FETCH-LOGICAL-c3917-f674dbbcbaa2aec8000862b9f085963e5802ef4b5e1ab7285cd2041d933404d63</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://onlinelibrary.wiley.com/doi/pdf/10.1111%2Fjofi.13117$$EPDF$$P50$$Gwiley$$H</linktopdf><linktohtml>$$Uhttps://onlinelibrary.wiley.com/doi/full/10.1111%2Fjofi.13117$$EHTML$$P50$$Gwiley$$H</linktohtml><link.rule.ids>314,780,784,1416,27923,27924,45573,45574</link.rule.ids></links><search><creatorcontrib>BOGUTH, OLIVER</creatorcontrib><creatorcontrib>DUCHIN, RAN</creatorcontrib><creatorcontrib>SIMUTIN, MIKHAIL</creatorcontrib><title>Dissecting Conglomerate Valuations</title><title>The Journal of finance (New York)</title><description>ABSTRACT
We develop a new method to estimate Tobin's Qs of conglomerate divisions without relying on standalone firms. Divisional Qs differ considerably from those of standalone firms across industries, over time, and in their sensitivity to economic shocks. The differences are explained by intraconglomerate covariance structures and access to internal capital markets that mitigate external financing frictions. Consequently, the Qs capture variation in the allocation of assets in the economy: within firms through internal capital markets and across focused and diversified firms through diversifying acquisitions. Overall, our method provides opportunities to study the economic mechanisms that explain corporate diversification.</description><subject>1978-2018</subject><subject>Asset allocation</subject><subject>Business valuation</subject><subject>Capital markets</subject><subject>Companies</subject><subject>Conglomerates</subject><subject>Diversification</subject><subject>Diversifikation</subject><subject>Economic shock</subject><subject>Interner Kapitalmarkt</subject><subject>Konglomerat</subject><subject>Korrelation</subject><subject>Schätzung</subject><subject>Tobins Q</subject><subject>USA</subject><issn>0022-1082</issn><issn>1540-6261</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2022</creationdate><recordtype>article</recordtype><recordid>eNp9kE1LAzEURYMoWKsbf0HRnTD1vXxNZinVaqXQjboNmZlMSZlOajJF-u9NHcGdd3M3h3PhEnKNMMWU-41v3BQZYn5CRig4ZJJKPCUjAEozBEXPyUWMGzhGiBG5eXQx2qp33Xoy89269VsbTG8nH6bdm975Ll6Ss8a00V799pi8z5_eZi_ZcvW8mD0ss4oVmGeNzHldllVpDDW2UmlASVoWDShRSGaFAmobXgqLpsypElVNgWNdMMaB15KNye3g3QX_ubex1xu_D12a1FRyKHJWACTqbqCq4GMMttG74LYmHDSCPn6gjx_onw8SPBlgW_nOxT9UAVKejCwhOCBfrrWHf2T6dTVfDNpv2CVm-Q</recordid><startdate>202204</startdate><enddate>202204</enddate><creator>BOGUTH, OLIVER</creator><creator>DUCHIN, RAN</creator><creator>SIMUTIN, MIKHAIL</creator><general>Blackwell Publishers Inc</general><scope>OQ6</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope></search><sort><creationdate>202204</creationdate><title>Dissecting Conglomerate Valuations</title><author>BOGUTH, OLIVER ; DUCHIN, RAN ; SIMUTIN, MIKHAIL</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c3917-f674dbbcbaa2aec8000862b9f085963e5802ef4b5e1ab7285cd2041d933404d63</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2022</creationdate><topic>1978-2018</topic><topic>Asset allocation</topic><topic>Business valuation</topic><topic>Capital markets</topic><topic>Companies</topic><topic>Conglomerates</topic><topic>Diversification</topic><topic>Diversifikation</topic><topic>Economic shock</topic><topic>Interner Kapitalmarkt</topic><topic>Konglomerat</topic><topic>Korrelation</topic><topic>Schätzung</topic><topic>Tobins Q</topic><topic>USA</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>BOGUTH, OLIVER</creatorcontrib><creatorcontrib>DUCHIN, RAN</creatorcontrib><creatorcontrib>SIMUTIN, MIKHAIL</creatorcontrib><collection>ECONIS</collection><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>The Journal of finance (New York)</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>BOGUTH, OLIVER</au><au>DUCHIN, RAN</au><au>SIMUTIN, MIKHAIL</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Dissecting Conglomerate Valuations</atitle><jtitle>The Journal of finance (New York)</jtitle><date>2022-04</date><risdate>2022</risdate><volume>77</volume><issue>2</issue><spage>1097</spage><epage>1131</epage><pages>1097-1131</pages><issn>0022-1082</issn><eissn>1540-6261</eissn><abstract>ABSTRACT
We develop a new method to estimate Tobin's Qs of conglomerate divisions without relying on standalone firms. Divisional Qs differ considerably from those of standalone firms across industries, over time, and in their sensitivity to economic shocks. The differences are explained by intraconglomerate covariance structures and access to internal capital markets that mitigate external financing frictions. Consequently, the Qs capture variation in the allocation of assets in the economy: within firms through internal capital markets and across focused and diversified firms through diversifying acquisitions. Overall, our method provides opportunities to study the economic mechanisms that explain corporate diversification.</abstract><cop>Cambridge</cop><pub>Blackwell Publishers Inc</pub><doi>10.1111/jofi.13117</doi><tpages>35</tpages></addata></record> |
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| language | eng |
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| source | Wiley Online Library All Journals |
| subjects | 1978-2018 Asset allocation Business valuation Capital markets Companies Conglomerates Diversification Diversifikation Economic shock Interner Kapitalmarkt Konglomerat Korrelation Schätzung Tobins Q USA |
| title | Dissecting Conglomerate Valuations |
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