Chatterjee, Wernerfelt (1991)

Question 1

the systematic factors that influence the type of diversification

Answer 1

H2: (SUP) Presence of intangible assets will lead to related diversification
H3a: (SUP) Availability of internal funds will favour more unrelated diversification

Question 2

Key message

Answer 2

Implications:
- A strong association between intangible assets and more related diversification
- No association between the ability to raise equity capital and the type of entered market
- Higher-performing firms supported the model better