The Conglomerate Discount in Germany and the Relationship to Corporate Governance

Abstract

This paper documents the conglomerate discount for all available German firms andthe DAX 30 firms in detail. It shows a moderate discount of about 0.06 based onGerman comparable firms and of about 0.20 for a combined sample of German andEuropean peer groups. I further examine the relationship between the discount andindustry concentration as well as uncertainty of valuation. Finally, I document thatcorporate governance behavior affects the conglomerate discount.