Optimal Diversification: Reconciling Theory and Evidence

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Spin-Offs, Divestitures, and Conglomerate Investment (2007, background): “In addition, Maksimovic and Phillips (2000), Bernardo and Chowdry (2002), and Gomes and Livdan (2004) have demonstrated theoretically and empirically that the diversification discount and patterns of internal resource allocation perceived as inefficient can be explained by rational maximizing…”
Opportunity Costs and Non-Scale Free Capabilities: Profit Maximization, Corporate Scope, and Profit Margins (2010, background): “…in diversification behavior, there is no diversification discount, the act of diversification is interpreted as a ‘signal’ that the firm has relatively few ex ante capabilities and is diversifying due to the correspondingly low rates of return in its initial markets (e.g., Gomes and Livdan, 2004).”
Does the Diversification–Firm Performance Relationship Change Over Time? A Meta‐Analytical Review (2018, unknown): “…level and type of diversification that best matches their capabilities, resources, and other firm-specific factors, and thus produces better performance outcomes relative to alternative diversification strategies (see Gomes and Livdan, 2004, and Maksimovic and Phillips, 2002 for similar arguments).”
Corporate Investment and Asset Price Dynamics: Implications for the Cross-Section of Returns (2004, unknown): “The data is for the period July 1963 through December 2001.(17) Table 1 provides summary statistics for these returns.”