TY  - RPRT
U1  - Arbeitspapier
A1  - Schwetzler, Bernhard
A1  - Reimund, Carsten
T1  - Conglomerate discount and cash distortion
BT  - new evidence from Germany
T2  - HHL-Arbeitspapier
N2  - Conglomerate discounts or premia are derived by comparing market values of conglomerates with the market values of a matched portfolio of stand alone firms (the imputed value of the conglomerates). Usually this comparison is based on firm values. We show that in this case conglomerate discounts or premia are subject to a potential bias caused by different cash holdings of conglomerates and stand alone firms. We prove evidence of such a cash distortion for German data: as German conglomerates hold on average substantially higher cash positions than the matched portfolio of stand alones, excess firm values are systematically upwards biased. Deducting cash from firm value and calculating discounts or premia based on enterprise values removes the bias. Based on excess enterprise values we are able to show a modest, but statistically significant conglomerate discount in Germany that is about 6% on an enterprise value basis.
T3  - HHL-Arbeitspapier / HHL Working paper - 60 
Y1  - 2003
SP  - 31
S1  - 31
PB  - HHL Leipzig Graduate School of Management
CY  - Leipzig
ER  -