Capital Structure Decisions In Multibusiness Firms

Previously, empirical financial studies paid little attention to the role of diversification strategy on financial choices. The aim of the present paper was to analyze the financing strategies of multibusiness firms, suggesting the relevance in sorting the diversification phenomena into its related and unrelated components. The implications of the authors' findings are very relevant in that they explain earlier contradictory results on capital-structure determinants. The degree of product specialization/diversification and the direction of diversification (related or unrelated) translate into different corporate financial behaviors.