Download or read book The Effect of the Financial Crisis on the Value of Corporate Diversification in Spanish Firms written by Gabriel de la Fuente and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the impact of the financial crisis on the value of corporate diversification in a civil law country such as Spain. The financial crisis offers a natural research experiment to test the effect of a credit-constrained environment on benefits and costs emerging from internal capital markets. Using a panel of Spanish listed firms over the 1997 to 2012 period and controlling for endogeneity, we find that the financial crisis negatively moderates the impact of industrial diversification on a firm's value. This result supports the idea that financial constraints are likely to exacerbate agency costs within internal capital markets in civil law countries over financial benefits, due to a weaker protection of investors' rights.