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Diversification's effect and manager experience on investment efficiency

Author

Listed:
  • Hsiao, Hsiao-Fen
  • Tang, Jinquan
  • Wen, Conghua

Abstract

This paper discusses whether diversification is the optimal business strategy for a firm and whether diversification leads to efficient fund allocation. The analysis reveals that bad divisions in diversified firms exhibits over-investment with higher investment levels than ineffective specialized firms. Meanwhile, good divisions of diversified firms shows lower investment levels than effective specialized firms.

Suggested Citation

  • Hsiao, Hsiao-Fen & Tang, Jinquan & Wen, Conghua, 2024. "Diversification's effect and manager experience on investment efficiency," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 890-900.
    • Handle: RePEc:eee:ecanpo:v:81:y:2024:i:c:p:890-900
    DOI: 10.1016/j.eap.2024.01.009
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    References listed on IDEAS

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