Purpose Substantial previous researches find that corporate diversification lead to value erosion. Agency theory was an often-cited explanation to rationale decision maker’s motivations toward diversification. With 144 Chinese public companies from the Small and Medium board in Shenzhen Stock Exchange, I explain how agency problems motivate Chinese public firms to diversify. Data and methodolog...

Th is article examines the joint impact of three types of operational fl exibility in a theoretical model of a two-product fi rm that makes capacity, production and pricing decisions at three points in time with an underlying continuous-time information evolution. Mix fl exibility is measured by the cost of switching production between the two products. Volume fl exibility is measured by the fr...

Recent studies have suggested that firm-specific technological competence may be diversified and internationalised. We show that increases in competence increased corporate technological diversification until the early 1970s, and then again more recently. However, a new interrelationship has now emerged between the accumulation, diversification and internationalisation of technological competen...

This study examines the link between international diversification, organizational knowledge capabilities and corporate performance. The success or failure of international corporate diversification depends to a large extent on the capability of parent firms to transfer knowledge to subsidiaries, and for those local subsidiaries to effectively utilize that knowledge. However, according to the r...

This study examines how the risk-taking incentive of top executives drives the strategic risk-taking in corporate IT implementation. We use the risk incentive provided in executive compensation to capture top executives’ risk-taking incentive, and develop measures of aggressive IT implementation to capture strategic risk-taking in IT implementation. Our analysis provides empirical evidence that...

We analyze whether the diversification discount is driven by the book value bias of corporate debt. Book values of debt may be a more downward biased proxy of the market value of debt for diversified firms, relative to undiversified firms, as diversification leads to lower firm risk. Thus, measures of firm value based on book values of debt undervalue diversified firms relative to focused firms...

Despite the increasing scope for transactional approaches to corporate political activity (CPA) in emerging markets and rising concerns about the use of relational approaches, foreign firms in emerging economies appear to be reluctant to adopt transactional approaches to CPA. Using Resource Dependence theory we argue that criticality of resources, product diversification, integration with other...

Prior work has identified binding credit constraints during recessions. We assess whether corporate diversification alleviates these constraints. We use relative-to-industry growth in sales and growth in inventories as measures of a firm’s ability to fund its activities. We find that during recessions, industry-adjusted sales growth rates drop more for bank-dependent focused firms than for bank...