| Article ID: | iaor1989553 |
| Country: | United States |
| Volume: | 35 |
| Issue: | 8 |
| Start Page Number: | 1004 |
| End Page Number: | 1013 |
| Publication Date: | Aug 1989 |
| Journal: | Management Science |
| Authors: | Conine Thomas E., Jensen Oscar W., Tamarkin Maurry |
| Keywords: | financial, production |
The authors’ purpose is to examine a firm’s optimal output decision and valuation when its shareholders hold a limited number of risky assets. The primary theoretical result indicates that the market-to-book ratio is a function of the degree of shareholder diversification. The present theory suggests a negative relationship between a firm’s market-to-book ratio and shareholder diversification.