The "conglomerate discount" occurs in large, highly diversified businesses and results from analysts not knowing how to value the vast array of large businesses with complex financial reports.

Question

Quizplus · Accepted Answer

The statement is true. The conglomerate discount is a phenomenon where the market values a diversified company less than the sum of its individual parts. This is because it is difficult for analysts and investors to fully understand and value the various businesses within the conglomerate.

The "Conglomerate Discount" Occurs in Large, Highly Diversified Businesses and Results