Multibusiness firms and performance in Italy. What role does relatedness play?

Maurizio La Rocca; Tiziana La Rocca; F. Javier Sánchez Vidal

European Research on Management and Business Economics (May 2018)

Multibusiness firms and performance in Italy. What role does relatedness play?

Maurizio La Rocca,
Tiziana La Rocca,
F. Javier Sánchez Vidal

Affiliations

Maurizio La Rocca: Department of Economics, Statistics and Finance, University of Calabria, Via Pietro Bucci, Edificio Cubo 3/C, Arcavacata di Rende 87036, Cosenza, Italy; Corresponding author.
Tiziana La Rocca: Department of Economics, University of Messina, Piazza Pugliatti, 1 - 98122 Messina, Italy
F. Javier Sánchez Vidal: Department of Accounting and Finance, Technical University of Cartagena, C/ Real, 3 30201, Cartagena, Murcia, Spain

Journal volume & issue: Vol. 24, no. 2
pp. 63 – 70

Abstract

Read online

This paper evaluates the effect of diversification strategy on corporate value for a sample of Italian companies. It accounts for both the level of diversification and relatedness components. Empirical analyses show a U-shaped curvilinear relationship between diversification and value. In contrast to the mainstream literature, our results highlight that related diversification has a negative effect, while unrelated diversification is a value-creating strategy. JEL classification: L25, M10, Keywords: Product diversification, Multi-business firm, Relatedness, Firm performance, Firm value

Published in European Research on Management and Business Economics

ISSN: 2444-8834 (Print); 2444-8842 (Online)
Publisher: Elsevier
Country of publisher: Spain
LCC subjects: Social Sciences: Commerce: Business
Website: https://www.journals.elsevier.com/european-research-on-management-and-business-economics/

About the journal