"Uncertainty about Average Profitability and the Diversification Discount" with John Hund and Sheri Tice, Journal of Financial Economics, 96 (2010), 463-484.
ABSTRACT: The diversification discount (multiple segment firm value below the value imputed using single segment firm multiples) is commonly thought to be generated by agency problems, a lack of transparency, or lackluster future prospects for diversified firms. If multiple segment firms have lower uncertainty about mean profitability than single segment firms, rational learning about mean profitability provides an alternative explanation for the diversification discount that does not rely on suboptimal managerial decisions or a poor firm outlook. Empirical tests which examine changes in firm value across the business cycle and idiosyncratic volatility are consistent with lower uncertainty about mean profitability for multiple segment firms.
"Corporate Form and Proprietary Costs of Voluntary Disclosure," job market paper
ABSTRACT: Multi-segment (diversified) firms have a natural advantage over single- segment (focused) firms with respect to voluntary disclosure policy. Since aggregate disclosures by focused firms are at a finer level of detail than those of diversified firms, the latter have greater ability to react to focused firm information and therefore have a competitive advantage. I provide evidence that focused firms are less likely to provide earnings forecasts, which is consistent with higher proprietary costs of disclosure. However, tests using additional measures of voluntary disclosures (fore- cast lead time, specificity, and error) are inconclusive. Robustness tests addressing regulatory changes, sample selection biases, and endogenous firm decisions of disclosure and diversification offer additional insights into the literature on voluntary disclosure.
| monk_dissertation.pdf |
Work in Progress
"CEO Incentives and the Agency Costs of Diversified Firms," with Robert Tumarkin
"Sources of Uncertainty and Diversification," with John Hund and Sheri Tice
"Sources of Uncertainty and Diversification," with John Hund and Sheri Tice