The valuation discount of multi-segment firms in Australia

Grant Fleming; Barry Oliver; Steven Skourakis

doi:10.1111/1467-629X.00087

The valuation discount of multi-segment firms in Australia

Grant Fleming^*, Barry Oliver, Steven Skourakis

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

8 Citations (Scopus)

Abstract

This paper refines the Berger and Ofek (1995) methodology to estimate the valuation discount of multi-segment firms in Australia between 1988 and 1998. Evidence is found that based on earnings before tax, the sample of multi-segment firms traded at a 29 per cent greater discount than a comparable portfolio of single segment firms over the sample period. To explain the results further analysis shows that the valuation discount was driven by poorly performing multi-segment firms rather than multi-segment firms per se. This raises questions about studies that conclude that diversification is value destroying.

Original language	English
Pages (from-to)	167-185
Number of pages	19
Journal	Accounting and Finance
Volume	43
Issue number	2
DOIs	https://doi.org/10.1111/1467-629X.00087
Publication status	Published - Jul 2003

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The valuation discount of multi-segment firms in Australia

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