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Do Conglomerates Operate More Efficiently Than Single-Segment Firms?

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  • NILABHRA BHATTACHARYA

    (Southern Methodist University, United States)

  • JOHAN SULAEMAN

    (Department of Finance, NUS Business School, National University of Singapore. 15 Kent Ridge Drive, Singapore 119245)

  • JEFF JIEWEI YU

    (University of Arizona, United States)

Abstract

We investigate the impact of organizational form on operational efficiency using a large sample covering manufacturing and non-manufacturing sectors in the United States over 30 years. We quantify operational efficiency using various measures, and find robust evidence that segments of diversified firms are operationally more efficient than their single-segment industry peers. The difference is more noticeable in industries where financing needs are high due to greater growth potential and where access to external markets is constrained due to higher information asymmetry.

Suggested Citation

  • Nilabhra Bhattacharya & Johan Sulaeman & Jeff Jiewei Yu, 2020. "Do Conglomerates Operate More Efficiently Than Single-Segment Firms?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(05), pages 1237-1270, September.
    • Handle: RePEc:wsi:serxxx:v:65:y:2020:i:05:n:s0217590819400046
    DOI: 10.1142/S0217590819400046
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    Keywords

    Conglomerates; efficiency;

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