Diversification and control in emerging markets: the case of Chilean Firms

2015. Cuadernos de Economia y Direccion de la Empresa / BRQ Business Research Quarterly. Vol. 18, N° 4, Pp. 259-274

Felix Lopez I, Christian Espinoza M, Mauricio Jara B

Abstract:

This study is the first to analyze the effect on firm value of companies when they participate in the ownership of others companies in an emerging South American economy. For a sample of 83 non-financial Chilean companies traded in the 2005-2009 period, we find evidence of a discount for participate in ownership of other companies. However, this discount turns into a premium when participation in the ownership of another company results in control, especially in related sectors. In addition, we find a discount for unrelated corporate diversification similar to that found for other economies.

Palabras claves: Emerging Latin-American Markets, Chilean Firms, Unrelated Diversification, Ownership participation, Firm’s Value

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