Our 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. Our theory suggests a negative relationship between a firm's market-to-book ratio and shareholder diversification.
No takes yet. Share an insight, caveat, or question.
Conine et al. (1989) studied this question.
Synapse has enriched 5 related papers. Consider them for comparative context: