search query: @indexterm DIVERSIFICATION / total: 686
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| Author: | Thomas, S. |
| Title: | Firm diversification and asymmetric information: evidence from analysts' forecasts and earnings announcements |
| Journal: | Journal of Financial Economics
2002 : JUN, VOL. 64:3, p. 373-396 |
| Index terms: | DIVERSIFICATION INFORMATION CORPORATE STRUCTURE |
| Language: | eng |
| Abstract: | Managers frequently cite the desire to mitigate asymmetric information as a motivation for increasing firm focus. The information benefits of focus appear relevant for the subset of firms that actually increase thei focus; however, the relevance of focus-related information benefits for the population of diversified firms is an open question. This paper examines the relation between corporate diversification and asymmetric information proxies derived from analysts' forecasts and abnormal returns associated with earnings announcements. The author finds that greater diversification is not associated with increased asymmetric information. These results call into question the notion that corporate diversification strictly exacerbates information problems. |
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