Further evaluation of conglomerate performance

In the early years conglomerates were seen as the financial concept of the future. More recently their economic advantages have been seriously questioned. This article reviews the existing literature on conglomerate performance and extends the investigation through the early seventies. While conglomerates provide investors with less variability from market movements than do nonconglomerate firms, they provide less diversification than closed-end investment companies and mutual funds. Furthermore, risk adjusted performance measures of conglomerates did not differ significantly from those of other firms of portfolios. Thus, conglomerates should be viewed simply as another category of investments that plot along the security market line.