Christin Rudolph, Bernhard Schwetzler

• We iestigate how the 2008-2009 financial crisis affected the conglomerate discount in different regions of the world, using a sample of more than 65,000 firm-year observations from developed Asia Pacific, the British Isles, Continental Europe, and North America. Hence, we extend the U.S.-based study by Kuppuswamy and Villalonga (2010) to a global scale, incorporating the role of capital market development. Kuppuswamy and Villalonga (2010) find that the discount on conglomerates fell significantly in the wake of the recent financial meltdown. We show that the effect of the financial crisis upon the discount depends on the maturity of capital markets: regression analyses document a significantly decreasing discount for Asia Pacific, the British Isles and North America; however, for Continental Europe - the region possessing the least developed capital markets - the impact of the credit crunch upon the relative value of diversified firms is insignificant. Thus, the U.S.-based results of Kuppuswamy and Villalonga (2010) cannot be easily transferred to other regions. Keywords: conglomerate discount, capital market development, financial crisis