1992•Academy of Management ProceedingsRequires access

EXTENDING MODERN PORTFOLIO THEORY INTO THE DOMAIN OF CORPORATE DIVERSIFICATION: DOES IT APPLY?

Michael Lubatkin, Sayan Chatterjee

Abstract

A widely held belief is that diversification lowers a firm's unsystematic risk while not affecting its systematic risk. We tested this notion 28 times, using nineteen years of data and controlling for other factors that influence risk. The findings show that the relationship between corporate diversification and risk is

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Key concepts: Diversification (marketing strategy), Systematic risk, Modern portfolio theory, Portfolio, Business, Financial economics, Actuarial science, Economics