How Operational and Disclosure Complexity Shapes the Conglomerate Discount

Authors

• Feng Dong, Elon University
• John A. Doukas, Old Dominion UniversityFollow
• Son Wilson, East Tennessee State University
• Rongyao Zhang, Youngstown State University

Document Type

Conference Paper

Publication Date

2026

Publication Title

European Financial Management Association 2026 Annual Meetings

Pages

39 pp.

Conference Name

European Financial Management Association 2026 Annual Meetings, June 24-27, 2026, Kristiansand, Norway

Abstract

This study examines how firm operational diversification and disclosure complexity jointly drive the conglomerate discount. We disentangle disclosure complexity, which is determined by managerially influenced financial transparency, from accounting complexity, which is a direct informational consequence of operational complexity. We find that operational diversification is consistently associated with significant conglomerate discounts, while disclosure complexity independently reduces firm value and amplifies the magnitude of the discount when diversification is high. These findings suggest that transparent disclosures can mitigate valuation costs, offering important implications for managers seeking effective communication, investors assessing complex firms, and policymakers aiming to enhance disclosure quality and market efficiency.

Rights

© The Author 2026.

Included with the kind written permission of the copyright holder.

Original Publication Citation

Dong, F., Doukas, J. A., Wilson, S., & Zhang, R. (2026). How operational and disclosure complexity shapes the conglomerate discount [Conference paper]. European Financial Management Association 2026 Annual Meetings, Kristiansand, Norway.

Repository Citation

Dong, Feng; Doukas, John A.; Wilson, Son; and Zhang, Rongyao, "How Operational and Disclosure Complexity Shapes the Conglomerate Discount" (2026). Finance Faculty Publications. 64.
https://digitalcommons.odu.edu/finance_facpubs/64