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Diversification
Not putting all your eggs in one basket. Investors are encouraged to do this by modern portfolio theory, as holding several different shares and other assets helps to reduce risk. At the sharp end of business, however, diversification is somewhat out of fashion. Economic studies of diversifying corporate mergers have found that these often hurt the shareholders of the acquiring firm; by contrast, diversified firms that have sold off non-core businesses have typically made their shareholders much better off.
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- Part of Speech: noun
- Synonym(s):
- Blossary:
- Industry/Domain: Economy
- Category: Economics
- Company: The Economist
- Product:
- Acronym-Abbreviation:
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