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Purpose
The authors study the valuation effect of corporate diversification in the initial phase of the COVID-19 pandemic in 2020 in Europe.
Design/methodology/approach
Applying a cross-sectional regression model to a sample of public companies headquartered in the European Union, the authors investigate the existence of and the change in a diversification discount between 2018 and 2020. By applying the Excess Q methodology, the authors make an industry adjustment of diversified companies to measure the value effect of corporate diversification.
Findings
The authors find an economically and statistically significant diversification discount that increases from an average Excess Q of −0.05 in 2019 to −0.10 in 2020. The diversified companies' inferior fundamental financial performance in 2020 accompanies the discount. The results deviate from those of previous research, which mostly show a decrease in the diversification discount in economic crises, and thereby, shed doubt on whether diversification provides insurance against pandemic-induced adverse value effects.
Originality/valueThe study distinguishes the role of corporate diversification during recessionary periods by establishing that the valuation effect of diversification depends on the nature of the crisis. The analysis incorporates criticism of previous studies concerning a biased methodology and uniform data source by applying the Excess Q methodology and using FactSet industry segment data.
Relocation of production to countries with low labour costs has induced increased labour market flexibility, which has been praised as a silver bullet for economic growth and low unemployment. Within a unionised oligopoly framework, in which a multinational firm has the option to relocate its production to a foreign country, we analyse the welfare implications of both centralised and flexible wage-setting regimes. For very low foreign wages, wage flexibility leads to higher welfare than a rigid centralised regime. In contrast, for ‘intermediate’ wage levels in the foreign country, an industry-wide uniform wage leads to higher social welfare than flexible wages.
This article reviews the literature on Christmas economics. First, we present an overall picture of the debate on the potential welfare loss of gift-giving and we show strategies that reduce the potential welfare loss and might increase the number of presents received. Second, we discuss the effect of Christmas on prices and the business cycle. We provide evidence that at Christmas stock prices and airfares increase, while food prices decrease.
Student-faculty interactions that promote learning are essential contributors to student retention, academic success and satisfaction. But the factors that causally initiate and frame these interactions are not well understood. Only if students evaluate these interactions as positive will they seek them. We conducted a survey experiment with students (n = 375) from a tuition-fee-free German business school, using conditional process analysis to assess which factors frame effective interactions. We focus on out-of-classroom standard and non-standard requests that students make to faculty, then investigate how faculty and student gender and students’ academic entitlement influence the interaction. Our study examines how students evaluate the interaction with faculty: when they seek interaction, their expectations of getting their requests approved, and their disappointment when their requests are declined. We find a significant influence of the request type along with moderating effects of faculty gender, student gender and student entitlement, particularly for non-standard work requests. We conclude with policy implications for university management: developing target-group-specific measures that facilitate the desired and positively evaluated student-faculty interactions might benefit all university stakeholders.