This paper analyzes the optimality of conglomeration. We show that the potential benefits of
conglomeration depend critically on the effectiveness of market discipline for stand-alone …

We analyze the risk-taking incentives of a financial conglomerate that combines a bank and
a non-bank financial intermediary. The conglomerate's risk-taking incentives depend on the …

This paper investigates whether the diversity of activities conducted by financial institutions
influences their market valuations. We find that there is a diversification discount: The market …

This paper investigates whether functional diversification is value-enhancing or value-
destroying in the financial services sector, broadly defined. Based on a US dataset …

We provide evidence on organizational structure and performance at bank holding
companies (BHC's). First, we show that a BHC's member banks benefit from access to …

There is an ongoing debate about whether firm focus creates or destroys shareholder value.
Earlier literature has shown significant diversification discounts: firms that engage in multiple …

C LEARLY, one of the most significant institutional developments affecting the organization
of American industry in recent years has been the trend toward diversification. Many …

Many models predict that the diversification and efficiency of financial intermediaries
(“banks”) increases with their size, so that a relatively unrestricted banking sector will settle …

This paper studies the investment of diversified and focused firms under various capital
market conditions. When external capital becomes more costly at the aggregate level …

The turbulence in financial markets since mid-2007 continues to reshape the industry and
raises fundamental questions about how large, complex financial firms operate. Greater …