Download or read book Is There a Diversification Discount in Financial Conglomerates written by Luc Laeven and published by . This book was released on 2005 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: Not sufficiently large to produce a diversification premium.

Download or read book Valuing Financial Conglomerates written by Claudia Curi and published by FrancoAngeli. This book was released on 2017-03-03T00:00:00+01:00 with total page 148 pages. Available in PDF, EPUB and Kindle. Book excerpt: 385.1

Download or read book Creating the Future with All Finance and Financial Conglomerates written by L. van den Berghe and published by Springer Science & Business Media. This book was released on 2013-03-09 with total page 227 pages. Available in PDF, EPUB and Kindle. Book excerpt: Creating the Future with All Finance and Financial Conglomerates comprises an academic search for an understanding of all finance and financial conglomerates. It presents a strategic and economic analysis of diversification strategies and the growing interface between different types of financial firms. On the basis of a solid analysis of theoretical foundations and practical value, the book develops basic concepts of creating the future: especially solutions in managing risks and fresh ideas for the development of integrated financial services. The structure of the book is logical: starting on theoretical foundations (section 1, part A) and examining the economic value of All Finance and Financial Conglomerates (part B), leads to creating a concept for the future (part C). Case studies add additional practical value to this research. The review of the subject is completed by aspects of risk management in this sector and by political guidelines for the EU single market (section 2). The book builds further on Professor Van den Berghe's first publication, entitled Financial Conglomerates - New Rules for New Players (published by Kluwer Academic Publishers in October 1995) and broadens the scope in the direction of strategic and managerial aspects. The following five aspects underline the innovativeness of the material: The volume is not only focused on the diversification of banks via `bancassurance', but also analyses in depth the parallel developments in the insurance market, whereby insurers and insurance intermediaries launch themselves in the direction of `assurfinance'; The material analyses not only the cross-selling of each other's products and the blurring of the market boundaries, but also the diversification, collaboration, and integration on all other levels and functions; New conceptual tools (the financial conglomerates control board) are developed to provide a more in-depth comparison of the many cases of this international trend; The book goes far beyond the categorisation of the mode of diversification, by looking at all managerial aspects of such a growth strategy; and The work looks at the economic and legal aspects involved as well as at the more strategic and managerial aspects. This research has been made possible thanks to the financial support of The LEVOB Foundation.

Download or read book Two Puzzles about the Diversification Discount written by and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book On the Risk Situation of Financial Conglomerates written by Nadine Gatzert and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Financial Conglomerates written by James Maycock and published by Gower Publishing Company, Limited. This book was released on 1986 with total page 136 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Conglomerate Discount and Corporate Governance in the European Market written by Giacomo Merlini and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Conglomerate discount, the discount of diversified firms compared to portfolios of single-business companies, has been largely debated by financial literature, but researches focused almost exclusively on the U.S., finding mixed conclusions. This work aims to expand the knowledge on diversification discount and its determinants. I analyse diversification effects with an updated valuation model and with two diversification measures in six of the main European markets (France, Germany, Great Britain, Italy, Spain, Switzerland) between 2011 and 2016. Moreover, I test how institutional, financial and legal differences between Continental Europe and Great Britain affect conglomerate discount. Finally, I investigate whether a virtuous Corporate Governance, through its mitigating role on agency costs, decreases disadvantages of diversification in Continental Europe. This analysis was never performed on Continental Europe and it is the first time that new Board monitoring role's indicators (e.g., independent Directors' tenure) are used in a research on conglomerate discount. I find a significant conglomerate discount in the six economies. Moreover, according to an Index that considers the extent of diversification, conglomerates in the more external capital market-based Great Britain (where diversification benefits are lower) show higher discounts. Additionally, I find that a virtuous Corporate Governance decreases conglomerate discount, but does not eliminate it, demonstrating that agency costs not mitigated by effective monitors are one, but not the only, cause of diversification discount. Furthermore, governance practices as higher Management ownership, larger Boards, higher independent Directors' turnover and lower Institutional ownership are individually able to decrease diversification discount.

Download or read book Conglomerates an alternative written by Florian Christ and published by GRIN Verlag. This book was released on 2004-04-03 with total page 13 pages. Available in PDF, EPUB and Kindle. Book excerpt: Essay from the year 2003 in the subject Business economics - Investment and Finance, grade: 1.3 (A), University of Kassel (Finance;International Management School), course: Investment Finance, language: English, abstract: Many managers believe that the interests of shareholders are best served by industry diversification. Such may be found in the so-called conglomerates (chaebol in South Korea; Keiretzu in Japan). a. Explain why this attitude among managers may exist, and whether there is some rationale behind it, i.e. from the point of view of the managers of these companies. Shareholders interest in buying shares is primarily to earn money. There are two major extremes to invest in shares. The first way is to invest in risky companies with high earnings and the other way is to invest in conservative shares with low earnings. There are a lot of alternatives between these extremes which balance the risk and the earnings. A mix of different shares will be the best solution and balance. The discussion about cooperate diversification starts already in the late 70’s, but until now there are no global accepted ideal results. With current market understanding and knowledge about the influence of trends on individual industries an investment in different industries like conglomerates is rational. Conglomerates with industry diversification can have a balance between risk and earnings with the potential of better results compared to other investments. The diversification of risk in each industry makes a balance between risk and different scenarios possible. Trends in stocks and industries can not be calculated, but a conglomerate can balance this risk trough the different industries. [...]

Download or read book Diversification Information Asymmetry Cost of Capital and Production Efficiency written by Yong Wang and published by . This book was released on 2008 with total page 189 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines how diversification changes firms' key characteristics, which consequently alter firms' value. The reason why I focus on this topic is because of the mixed findings in literature about the valuation effect of diversification. This study offers deeper insights to the influence of diversification on important valuation factors that are already identified in finance literature. Specifically, it examines if diversification affects firms' information asymmetry problem, firms' cost of capital and cash flow, and firms' production efficiency. The study looks at both the financial industry and non-financial industry and the chapters are arranged in the following order. Firstly, empirical studies show that investors do not value BHCs' pursuit of non-interest income generating activities and yet these activities have demonstrated a dramatic pace of growth in the recent decades. An interesting question is what factors drive the discontent of the investors with the diversification endeavors of the BHCs in non-interest income activities. The first chapter examines the subject from the view point of information opaqueness, which is unique in the banking industry in terms of its intensity. We propose that increased diversification into non-interest income activities deepens information asymmetry, making BHCs more opaque and curtailing their value, as a result. Two important results are obtained in support of this proposition. First, analysts' forecasts are less accurate and more dispersed for the BHCs with greater diversity of non-interest income activities, indicating that information asymmetry problem is more severe for these BHCs. Second, stock market reactions to earning announcements by these BHCs signaling new information to the market are larger, indicating that more information is revealed to the market by each announcement. These findings indicate that increased diversity of non-interest income activities is associated with more severe information asymmetry between insiders and outsiders and, hence, a lower valuation by shareholder. Secondly, since Lang and Stulz (1994) and Berger and Ofek (1995), corporate literature has taken the position that industrial diversification is associated with a firm value discount. However, the validity and the sources of the diversification discount are still highly debated. In particular, extant studies limit themselves to cash flow effects, totally overlooking the cost of capital as a factor determining firm value. Inspired by Lamont and Polk (2001), the second chapter examines how industrial and international diversification change the conglomerates' cost of capital (equity and debt), and thereby the firm value. Our empirical results, based on a sample of Russell 3000 firms over the 1998-2004 period, show that industrial (international) diversification is associated with a lower (higher) firm cost of capital. These findings also hold for firms fully financed with equity. In addition, international diversification is found to be associated with a lower operating cash flow while industrial diversification doesn't alter it. These results indicate that industrial (international) diversification is associated with firm value enhancement (destruction). Given the fact that the majority of the firms involved in industrial diversification also diversify internationally, failing to separate these two dimensions of diversification may result in mistakenly attributing the diversification discount to industrial diversification. Thirdly, financial conglomerates have been increasingly diversifying their business into banking, securities, and insurance activities, especially after the Gramm-Leach-Bliley Act (GLBA, 1999). The third chapter examines whether bank holding company (BHC) diversification is associated with improvement in production efficiency. By applying the data envelopment analysis (DEA), the Malmquist Index of productivity, and total factor productivity change as a decomposed factor of the index, are calculated for a sample of BHCs over the period 1997-2007. The following results are obtained. First, technical efficiency is negatively associated with activity diversification and the effect is primarily driven by BHCs that did not diversify through Section 20 subsidiaries before GLBA. Second, the degree of change in diversification over time does not affect the total factor productivity change but is negatively associated with technical efficiency change over time. This latter effect is also primarily shown on BHCs that did not have Section 20 subsidiaries before GLBA. Therefore, it can be concluded that diversification is on average associated with lower production efficiency of BHCs, especially those BHCs without first-mover advantage obtained through Section 20 subsidiaries. These chapters explores the possible channels through which diversification could alter firms' valuation. They contribute to the literature by offering further knowledge about the effect of diversification.

Download or read book Do Financial Conglomerates Create or Destroy Value Evidence for the EU written by Iman van Lelyveld and published by . This book was released on 2011 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: There is an ongoing debate whether firm focus creates or destroys shareholder value. Earlier literature has shown significant diversification discounts: firms that engage in multiple activities are valued less. Various factors are important in the size of the discount, for example cross-subsidization and agency problems. The extant literature, however, generally focuses on non-financial firms or traditional banking (cf (Laeven and Levine, 2007) and (Schmid and Walter, 2006)). Our paper focuses specifically on the valuation of bank-insurance conglomerates. We find no universal diversification discount but significant variability. Size, complexity and risk seem to be important determinants.

Download or read book After the Crash written by Richard Herring and published by Brookings Institution Press. This book was released on 2010 with total page 161 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Examines the ramifications of the 2007-08 financial crisis on the financial services industry and some of its practices and how these are likely to change in the future"--Provided by publisher.

Download or read book Bovernance and Bank Valuation written by Gerard Caprio and published by World Bank Publications. This book was released on 2003 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Which public policies and ownership structures enhance the governance of banks? This paper constructs a new database on the ownership of banks internationally and then assesses the ramifications of ownership, shareholder protection laws, and supervisory/regulatory policies on bank valuations. Except in a few countries with very strong shareholder protection laws, banks are not widely held, but rather families or the State tend to control banks. We find that (i) larger cash flow rights by the controlling owner boosts valuations, (ii) stronger shareholder protection laws increase valuations, and (iii) greater cash flow rights mitigate the adverse effects of weak shareholder protection laws on bank valuations. These results are consistent with the views that expropriation of minority shareholders is important internationally, that laws can restrain this expropriation, and concentrated cash flow rights represent an important mechanism for governing banks. Finally, the evidence does not support the view that empowering official supervisory and regulatory agencies will increase the market valuation of banks"--NBER website

Download or read book Do Financial Conglomerates Create or Destroy Economic Value written by Markus Schmid and published by . This book was released on 2013 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates whether functional diversification is value-enhancing or value-destroying in the financial services sector, broadly defined. Based on a U.S. dataset comprising approximately 4,060 observations covering the period 1985-2004, we report a substantial and persistent conglomerate discount among financial intermediaries. Our results suggest that it is diversification that causes the discount, and not that troubled firms diversify into other more promising areas. In addition, the discount applies to all financial services activity-areas with the exception of investment banking and is stable over different combinations of financial activity-areas with the exception of commercial banking units combined with insurance companies and/or investment banking activities.

Download or read book Mergers and Acquisitions in Banking and Finance written by Ingo Walter and published by Oxford University Press. This book was released on 2004-01-29 with total page 328 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is intended to lay out, in a clear and intuitive as well as comprehensive way, what we know - or think we know - about mergers and acquisitions in the financial services sector. It evaluates their underlying drivers, factual evidence as to whether or not the basic economic concepts and strategic precepts are correct. It looks closely at the managerial dimensions in terms of the efficacy of merger implementation, notably the merger integration process. The focus is on enhancing shareholder value creation and the execution of strategies for the successful management of mergers. It also has a strong public-policy component in this "special" industry where successes can pay dividends and failures can cause serious problems that reach well beyond the financial services industry itself. The financial services sector is about halfway through one of the most dramatic periods of restructuring ever undergone by a major global industry. The impact of the restructuring has carried well beyond shareholders of the firms and involved into the domain of regulation and public policy as well as global competitive performance and economic growth. Financial services are a center of gravity of economic restructuring activity. M&A transactions in the financial sector comprise a surprisingly large share of the value of merger activity worldwide -- including only deals valued in excess of $100 million, during the period 1985-2000 there were approximately 233,700 M&A transactions worldwide in all industries, for a total volume of $15.8 trillion. Of this total, there were 166,200 mergers in the financial services industry (49.7%), valued at $8.5 trillion (54%). In all of restructuring frenzy, the financial sector has probably had far more than its share of strategic transactions that have failed or performed far below potential because of mistakes in basic strategy or mistakes in post-merger integration. It has also had its share of rousing successes. This book considers the key managerial issues, focusing on M&A transactions as a key tool of business strategy - "doing the right thing" to augment shareholder value. But in addition, the degree of integration required and the historic development of integration capabilities on the part of the acquiring firm, disruptions in human resources and firm leadership, cultural issues, timeliness of decision-making and interface management have co-equal importance - "doing it right."

Download or read book Financial Conglomerates written by Lutgart A.A. Van den Berghe and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 196 pages. Available in PDF, EPUB and Kindle. Book excerpt: The last couple of years, financial conglomerates have been established all over Europe. This horizontal diversification has not only attracted a great deal of attention in the banking and insurance sector but has also alarmed the supervisory authorities and the European Commission. Although the benefits of financial conglomerates are straightforward, it is clear that quite a number of potential risks can not be ignored. Since the phenomenon of "financial conglomeration" is rather new, the regulators do not possess a great deal of objective, scientific reference bases on which to construct the necessary regulations. Moreover the complexities and specific char acteristics of the financial conglomerates do not permit a simple extrapolation of the rules for industrial conglomerates. Even the extrapolation of banking regula tions to insurance groups and vice versa poses a lot of difficult questions. These observations lie at the origin of the research carried out at the Erasmus Finance and Insurance Centre (EPIC at the Erasmus University in Rotterdam), in collaboration with the Impulse Centre for Financial Services and Insurance (ALEA at the Vlerick School of Management of the University of Ghent). To confront the research results with the expertise of the business world and the supervisory authorities a workshop was organised in Rotterdam (1994). This publication is partly based on these research results and the workshop discussions. Three main blocs can be distinguished: the definition of financial conglomerates; the potential risks and the regulatory aspects; the strategic issues.

Download or read book Reconceptualising Global Finance and its Regulation written by Ross P. Buckley and published by Cambridge University Press. This book was released on 2016-03-11 with total page 485 pages. Available in PDF, EPUB and Kindle. Book excerpt: Taking stock of the 2008 global financial crisis, this book provides 'outside the box' solutions for reforming international financial regulation.

Download or read book Corporate Finance written by Stephen Ross and published by McGraw-Hill/Irwin. This book was released on 2009-10-09 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate Finance, by Ross, Westerfield, and Jaffe emphasizes the modern fundamentals of the theory of finance, while providing contemporary examples to make the theory come to life. The authors aim to present corporate finance as the working of a small number of integrated and powerful intuitions, rather than a collection of unrelated topics. They develop the central concepts of modern finance: arbitrage, net present value, efficient markets, agency theory, options, and the trade-off between risk and return, and use them to explain corporate finance with a balance of theory and application. The well-respected author team is known for their clear, accessible presentation of material that makes this text an excellent teaching tool. The ninth edition has been fully updated to reflect the recent financial crisis and is now accompanied by Connect, an exciting new homework management system.