The Conglomerate Discount in Germany and the Relationship to Corporate Governance

This paper documents the conglomerate discount for all available German firms andthe DAX 30 firms in detail. It shows a moderate discount of about 0.06 based onGerman comparable firms and of about 0.20 for a combined sample of German andEuropean peer groups. I further examine the relationship between the discount andindustry concentration as well as uncertainty of valuation. Finally, I document thatcorporate governance behavior affects the conglomerate discount.