Corporate diversification and asymmetric information: Evidence from stock market trading characteristics

Journal of Corporate Finance

Volumn 10, Issue 1, 2004, Pages 105-129

  Clarke, Jonathan E ^a   Fee, C Edward ^b   Thomas, Shawn ^c  

^a GEORGIA INSTITUTE OF TECHNOLOGY   (United States)

^b MICHIGAN STATE UNIVERSITY   (United States)

^c UNIVERSITY OF PITTSBURGH   (United States)

Author keywords

Adverse selection; Asymmetric information; Diversification

Indexed keywords

EID: 0345490645     PISSN: 09291199     EISSN: None     Source Type: Journal    
DOI: 10.1016/S0929-1199(02)00050-0     Document Type: Article

References (49)

1. Affleck-Graves J. Hegde S. Miller R. Trading mechanisms and the components of the bid-ask spread The Journal of Finance 49 1994 1471-1488
2. Alchian A. Corporate management and property rights In: Manne H. (Ed.), Economic Policy and The Regulation of Corporate Securities 1969 337-360 American Enterprise Institute Washington, DC
3. Bates, T., Coughenour, J., Shastri, K., 1999. Spinoffs, spreads, and information asymmetry. Working paper, University of Pittsburgh.
4. Berger P. Ofek E. Diversification's effect on firm value Journal of Financial Economics 37 1995 39-65
5. Berger P. Ofek E. Causes and effects of corporate refocusing programs The Review of Financial Studies 12 1999 311-345
6. Brennan M. Subrahmanyam A. Investment analysis and price formation in securities markets Journal of Financial Economics 38 1995 361-381
7. Campa J. Kedia S. Explaining the diversification discount Journal of Finance 2002 (in preparation)
8. Caves R. Porter M. Spence A.M. Competition in The Open Economy: A Model Applied to Canada 1980 Harvard Univ. Press Cambridge, MA
9. Chang, C., Yu, X., 1999. The informational benefits and costs in conglomerate mergers. Working paper, University of Minnesota.
10. Clarke, J., Shastri, K., 2001. On information asymmetry metrics. Working paper, University of Pittsburgh.
11. Comment R. Jarrell G. Corporate focus and stock returns Journal of Financial Economics 37 1995 67-87
12. Dennis, P., Weston, J., 2001. Who's informed? An analysis of stock ownership and informed trading. Working paper, University of Virginia.
13. Denis D. Denis D. Sarin A. Agency problems, equity ownership, and corporate diversification Journal of Finance 52 1997 135-160
14. Easley D. Kiefer N. O'Hara M. Paperman J. Liquidity, information, and infrequently traded stocks Journal of Finance 51 1996 1405-1433
15. Flannery, M., Kwan, S., Nimalendran, M., 2000. Market evidence on the opaqueness of banking firms' assets. Working paper, University of Florida.
16. Foster D. Viswanathan S. Variations in trading volume, return volatility, and trading costs: evidence on recent price formation models Journal of Finance 48 1993 187-211
17. Gertner R. Scharfstein D. Stein J. Internal versus external capital markets The Quarterly Journal of Economics 109 1994 1211-1230
18. Gilson S. Healy P. Noe C. Palepu K. Analyst specialization and conglomerate stock breakups Journal of Accounting Research 39 2001 565-582
19. Gorton G. Pennacchi G. Security baskets and index-linked securities Journal of Business 26 1993 1-27
20. Habib M. Johnsen D. Naik N. Spinoffs and information Journal of Financial Intermediation 6 1997 153-176
21. Hadlock C. Ryngaert M. Thomas S. Corporate structure and equity offerings: are there benefits to diversification? Journal of Business 74 2001 613-635
22. Hasbrouck J. Measuring the information content of stock trades Journal of Finance 46 1991 179-207
23. Hasbrouck, J., Sofianos, G., Sosesbee, D., 1993. New York Stock Exchange Systems and Trading Procedures. NYSE working paper #93-01.
24. Huson, M., MacKinnon, G., 2001. Corporate spinoffs and information asymmetry between investors. Working Paper, St. Mary's University.
25. Jacquemin A. Berry C. Entropy measure of diversification and corporate growth The Journal of Industrial Economics 27 1979 359-369
26. Krishnaswami S. Subramaniam V. Information asymmetry, valuation, and the corporate spin-off decision Journal of Financial Economics 53 1999 73-112
27. Kyle A. Continuous auctions and insider trading Econometrica 53 1985 1315-1336
28. Lang L. Stulz R. Tobin's q, corporate diversification, and firm value Journal of Political Economy 102 1994 1248-1280
29. Lee C. Ready M. Inferring trade direction from intraday data Journal of Finance 46 1991 733-746
30. Lin J. Sanger G. Booth G. Trade size and components of the bid-ask spread The Review of Financial Studies 8 1995 1153-1183
31. Maksimovic V. Phillips G. Do conglomerate firms allocate resources inefficiently across industries? Theory and evidence Journal of Finance 57 2002 721-766
32. Montgomery C. Corporate diversification Journal of Economic Perspectives 8 1994 163-178
33. Nanda V. Narayanan M. Disentangling value: financial needs, firm scope, and divestitures Journal of Financial Intermediation 8 1999 74-204
34. Palepu K. Diversification strategy, profit performance, and the entropy measure Strategic Management Journal 6 1985 239-255
35. Piwowar, M., Wei, L., 2001. The sensitivity of effective spread estimates to trade-quote matching algorithms. Working paper, Iowa State University.
36. Rajan R. Servaes H. Zingales L. The cost of diversity, the diversification discount and inefficient investment Journal of Finance 55 2000 35-80
37. Sadtler D. Campbell A. Koch R. Breakup!: How Companies Use Spin-Offs to Gain Focus and Grow Strong 1997 Free Press New York
38. Sarin, A., Shastri, K., Shastri, K., 2000. Ownership structure and stock market liquidity. Working paper, University of Pittsburgh.
39. Scharfstein, D., 1998. The dark side of internal capital markets II: evidence from diversified conglomerates. Working paper, National Bureau of Economic Research.
40. Scharfstein D. Stein J. The dark side of internal capital markets: divisional rent seeking and inefficient investment Journal of Finance 55 2000 2537-2564
41. Schlingemann F. Stulz R. Walkling R. Divestitures and the liquidity of the market for corporate assets Journal of Financial Economics 64 2002 117-144
42. Stein J. Internal capital markets and the competition for corporate resources Journal of Finance 52 1997 111-134
43. Stein J. Information production and capital allocation: decentralized vs. hierarchical firms Journal of Finance 2002 (in preparation)
44. Subrahmanyan A. A theory of trading stock index futures Review of Financial Studies 1 1991 17-51
45. Thomas S. Firm diversification and asymmetric information: evidence from analysts' forecasts and earnings announcements Journal of Financial Economics 64 2002 373-396
46. Van Ness, B., Van Ness, R., Warr, R., 2001. Does order preferencing reduce adverse selection for Nasdaq stocks? Working paper, North Carolina State University.
47. Villalonga, B., 2001. Does diversification cause the "diversification discount"? Working paper, University of California, Los Angeles.
48. Whited T. Is it inefficient investment that causes the diversification discount? Journal of Finance 56 2001 1667-1691
49. Williamson O. Markets and Hierarchies: Analysis and Antitrust Implications 1975 Collier Macmillan Publishers New York