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Full-Text Articles in Business
Diversity, Diversification And Profitability Among British Manufacturing Companies, 1972-1984, Robert M. Grant, Azar P. Jammine, Howard Thomas
Diversity, Diversification And Profitability Among British Manufacturing Companies, 1972-1984, Robert M. Grant, Azar P. Jammine, Howard Thomas
Research Collection Lee Kong Chian School Of Business
This study investigated the causal relationships between diversity, diversification, and profitability among 304 large British manufacturing companies that differed in both product and multinational diversity. Diversity and profitability were positively related up to a point; after that point, increases in product diversity were associated with declining profitability. The results were unclear with respect to the underlying causal relationships. Product diversification did not increase profitability, and there was limited evidence that profitability promoted diversification. For multinational diversification, however, we found that profitability in the home market encouraged overseas expansion that in turn increased profitability.
Attitudes And The Risk-Return Paradox: Prospect Theory Explanations, Avi Fiegenbaum, Howard Thomas
Attitudes And The Risk-Return Paradox: Prospect Theory Explanations, Avi Fiegenbaum, Howard Thomas
Research Collection Lee Kong Chian School Of Business
This study attempted to explain Bowman's risk-return paradox in terms of recent research in behavioral decision theory and prospect theory. The research emphasized the role of reference, or target, return levels in analyzing risky choices. For returns below target, a large majority of individuals appear to be risk seeking; for returns above target, a large majority appear to be risk averse. Using extensive COMPUSTAT-based data on U.S. firms, we consistently found a negative risk-return association for firms having returns below target levels and a positive association for firms with returns above target. These results support the basic propositions of prospect …