From diversification premium to diversification discount during institutional transitions

Lee, Keonbeom; Peng, Mike W.; Lee, Keun
January 2008
Journal of World Business;Jan2008, Vol. 43 Issue 1, p47
Academic Journal
Abstract: Recent development of an institution-based theory of corporate diversification has uncovered a diversification premium in emerging economies, suggesting that some business group-affiliated companies may outperform competing firms not affiliated with business groups. Is the diversification premium found in emerging economies likely to hold over time? This article extends the institution-based theory by arguing that as institutional transitions unfold, diversification premium in emerging economies is likely to dissipate over time and eventually become a diversification discount. We empirically draw on a data set from South Korea between 1984 and 1996 involving 84 business groups and 751 group-affiliated and independent firms to substantiate this claim via a �chop shop� method. To the best of our knowledge, this represents the first study that documents the longitudinal process of how a diversification premium becomes a diversification discount during institutional transitions.


Related Articles

  • With a smile and with a discount... Smith, David // Management Today;Dec1999, p27 

    Argues that while Great Britain retailers have been steadily cutting the price of goods, the interest rates will not come down until the services sector follows suit. Pressures of global competition in an environment of low world inflation; Inflation; Floor for service-sector prices.

  • ASSET-BACKEDS.  // Asset Securitization Report;9/13/2004, Vol. 4 Issue 35, p30 

    This article presents statistical information related to discount rates on various financial companies in the United States.

  • MORTGAGES.  // Money Marketing;3/16/2006, p63 

    The article evaluates three mortgage products in Great Britain. These are Principality Building Society's three-year fixed-rate mortgage, Leeds Building Society's light-impaired base-rate tracker and Kensington Mortgages' extra choices two-year discount minimum. Information about each mortgage's...

  • Accounts Receivable Policy Under Stochastic Inflation.  // Journal of Accounting, Auditing & Finance;Summer92, Vol. 7 Issue 3, p311 

    This section presents a professional adaptation of the paper Accounts Receivable Policy Under Stochastic Inflation by Carmelo Giaccotto, published in this same issue of Journal of Accounting, Auditing and Finance. It is widely recognized that trade credit is basically a loan extended by the...

  • Cash-out refis are key to near-term extension risk. K. S. // Asset Securitization Report;11/14/2005, Vol. 5 Issue 43, p15 

    The article forecasts the impact of interest rates increase and cash-out refinance volume decline on discount speeds in the United States. According to Credit Suisse First Boston analysts, annualized cash-out volume is expected to decline to $135 billion should mortgage rates rise to 6.90%....

  • Land a good deal. Rai, Rakesh // Money Today;10/16/2008, p10 

    The article stresses the benefit of acquiring real property amid the uncertainty in the real estate market in India. The market is characterized by a steep decline in housing demand and prices as well as a rising interest rate. The significance of the indirect discounts and funding incentives on...

  • MONEY RATES.  // Caribbean Business;5/26/2005, Vol. 33 Issue 20, p53 

    This article presents information on money rates in Puerto Rico. The discount rate is 4.00%, federal funds is 3.00%, prime rate is 6.00%, call money is 4.75%, overnight purchase rate is 2.95%.

  • Haggle your way to Savings. Grant, Kelli B. // Good Housekeeping;Jul2008, Vol. 247 Issue 1, p97 

    The article offers tips on how to negotiate the prices and interest rates. It recommends to select the credit card offerings with the lowest interest rates that meet the consumer's credit standing. Consumers could compare and check the prices of appliances from big-name retailers in the Internet...

  • Weekly T-Bills Go at 0.145%, 0.330% High Rates.  // Bond Buyer;11/17/2015, Vol. 1 Issue 34411, p1 

    Tender rates for the Treasury Department's latest 91-day and 182-day discount bills were mixed, as the three-months incurred a 0.145% high rate, up from 0.135% the prior week, and the six-months incurred a 0.330% high rate, down from 0.340% the week before.


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics