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Article: Conglomeration as a Hedging Mechanism
| Title | Conglomeration as a Hedging Mechanism |
|---|---|
| Authors | |
| Keywords | Internal market External market Risk hedging |
| Issue Date | 2010 |
| Abstract | This paper presents a new theory on conglomeration. We show that conglomeration can serve as an effective mechanism in risk hedging. A conglomerate can be set up so that risks among some of its subsidiaries are negatively correlated. By such a design, the overall risk of the conglomerate is kept to a minimum while maintaining growth. We also identify a diversification discount and provide a new explanation to the diversification discount. We indeed find empirical evidence in support of our theory. |
| Persistent Identifier | http://hdl.handle.net/10722/141889 |
| SSRN |
| DC Field | Value | Language |
|---|---|---|
| dc.contributor.author | Jiang, K | - |
| dc.contributor.author | Wang, S | - |
| dc.date.accessioned | 2011-09-27T09:23:10Z | - |
| dc.date.available | 2011-09-27T09:23:10Z | - |
| dc.date.issued | 2010 | - |
| dc.identifier.uri | http://hdl.handle.net/10722/141889 | - |
| dc.description.abstract | This paper presents a new theory on conglomeration. We show that conglomeration can serve as an effective mechanism in risk hedging. A conglomerate can be set up so that risks among some of its subsidiaries are negatively correlated. By such a design, the overall risk of the conglomerate is kept to a minimum while maintaining growth. We also identify a diversification discount and provide a new explanation to the diversification discount. We indeed find empirical evidence in support of our theory. | - |
| dc.language | eng | - |
| dc.subject | Internal market | - |
| dc.subject | External market | - |
| dc.subject | Risk hedging | - |
| dc.title | Conglomeration as a Hedging Mechanism | en_US |
| dc.type | Article | - |
| dc.identifier.ssrn | 1547874 | - |