Diversification, Ricardian Rents, and Tobin's q

According to prevailing theory, firms diversify in response to excess capacity of factors that are subject to market failure. By probing into the heterogeneity of these factors, we develop the corollary that firms that elect to diversify most widely should expect the lowest average rents. An empirical test, with Tobin's q as the measure of rents, is consistent with this theory.

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Year of publication:	1988
Authors:	Montgomery, Cynthia A. ; Wernerfelt, Birger
Published in:	RAND Journal of Economics. - The RAND Corporation, ISSN 0741-6261. - Vol. 19.1988, 4, p. 623-632
Publisher:	The RAND Corporation

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Extent:	application/pdf
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005551235