• diversification;
  • value impact;
  • internationalization;
  • industry;
  • risk

Abstract:  The literature on value impact of diversification decisions has focused on US firms and has examined industrial rather than geographic diversification. This study exploits the Lang and Stulz (1994), Berger and Ofek (1995) and Bodnar et al. (1999) methodologies and controls for form of diversification in assessing value impact for a sample of UK firms, for the period 1996-2000. Using an adjusted value metric that controls for industry effects, we report a significant and perverse geographic discount of 14%, and no systematic industrial value impact, suggesting that sector characteristics may be a significant driver of diversification choice for UK firms.