1984•Strategic Management JournalRequires access

Diversification strategy and systematic risk

Cynthia A. Montgomery, Harbir Singh

Abstract

Abstract This paper addresses the relationship between diversification strategy and systematic risk (beta). Beta values are examined for six diversification categories, and it is found that betas for unrelated diversifiers are significantly higher than those of other firms. Possible contributions to this difference, including market power, capital structure, and capital intensity are explored.

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Key concepts: Diversification (marketing strategy), Systematic risk, Economics, Financial economics, Business, Industrial organization, Marketing