6.04. Diversification and control in emerging markets: the case of chilean firms.

Palabras Clave: Emerging Latin-American Markets; Chilean Firms; Unrelated Diversification; Ownership participation; Firm’s Value.

This study is the first to analyze the effect on firm value of companies when they participate in the ownership of others companies in an emerging South American economy. For a sample of 83 nonfinancial Chilean companies traded in the 2005–2009 period, we find evidence of a discount when firms participate in the ownership of others companies.

However, this discount turns into a premium when this participation in others firm’s ownership serves to obtain their control, especially in related sectors. In addition, we find a discount for unrelated corporate diversification similar to that found in previous evidence for several others countries.