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We analyze the conglomerate discount in European markets considering the conglomerates that engaged in spinoffs between 1996 and 2006. Then we analyze the relation between the conglomerate discount and information asymmetry. Given that many studies assess that firms with a higher level of information asymmetry are more likely to engage in these transactions in order to face perceived undervaluation, we empirically analyze the impact of information asymmetry in the existence of conglomerate discount in the European markets, through the analysis of conglomerates that engaged in spinoffs. Consistent with expectations we find that many conglomerates that trade at discount compared to a portfolio of single segment firms and that engage in spinoffs, eliminate or reduce their discount and that the discount is positively related to two of the four measures of information asymmetry we considered in our analysis
About the author
I was born in Italy, in a small town in the centre called Perugia, where I grew up. I left right after high school and I moved to Milan, where I studied Finance at Bocconi University. I graduated in 2008 and I moved to London, where I still live and I am currently working in the Investment Banking industry.
