| Abstract: | This study examines the relationship between diversification patterns of corporations and their long-term performance. It is seen that the standard performance measures suggested in corporate finance literature rate all corporations equally in the long run regardless of their diversification strategies. This is because all corporations tend to earn a normal rate of return, given risk, for their shareholders in generally efficient capital markets. Since finance performance measures are not helpful in analyzing corporate performance, use of other measures is suggested for the purpose. |
