Why Do Managers Diversify Their Firms? Agency Reconsidered

By Rajesh K. Aggarwal, Andrew A. Samwick. 2003

417 citations recorded by the source corpus.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/639ba2e8855c25b264c1ea02ad54d6f2166699b8

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Economics and Econometrics

Citations in the corpus

Does Good Corporate Governance Include Employee Representation? Evidence from German Corporate Boards (2006, positive): “A similar measure has also been used by Fama and French (1998), La Porta, Lopez-de-Silanes, Shleifer, and Vishny (2002), and Aggarwal and Samwick (2003).”
Corporate Risk Taking and Ownership Structure (2010, background): “The benefits of group participation are that shareholders offer both risk-reduction and group-related private benefits Aggarwal and Samwick (2003).”
CEO Duality, Agency Costs, and Internal Capital Allocation Efficiency (2019, neutral): “…the view that diversified firms appear to incubate entrenched managers who engage in self-interested investments at the expense of shareholders to reap private benefits by overinvesting and growing their firms beyond their optimal size (Jensen and Meckling, 1976; Aggarwal and Samwick, 2003).”
The dark side of diversification: The case of US financial holding companies (2006, background): “12“A Painless Extraction: Closer Look at USB-Piper,” Laura Mandaro, American Banker, February 21, 2003.”
Managerial risk-taking behavior and equity-based compensation (2009, positive): “Aggarwal and Samwick (2003) present a principal-agent model where diversification, incentives and performance are endogenously determined and they conclude that diversification is motivated by the private benefits associated with running a diversified firm and not by risk-reduction considerations.”
Benefiting From Alliance Portfolio Diversity (2014, background): “Uncertainty and risk motivate CEOs to invest in nonredundant technology domains (May, 1995), banks to diversify geographically (Shiers, 2002), and firms to diversify across business units (Aggarwal & Samwick, 2003; Lubatkin & Rogers, 1989).”
Managers with and without Style: Evidence Using Exogenous Variation (2013, background): “Similarly, Aggarwal and Samwick (2003, 2006) hypothesize that variations in managerial risk aversion can lead to variations in investment and acquisition choices.”