Diversification patterns in New Zealand listed companies∗

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Abstract
A product count method is used to measure the diversity of each of 103 New Zealand listed companies at three points in time: 1975, 1980, and 1985. Companies are classified to one of four diversification categories: very low; Telated; unrelated; and very high. The pattern of diversification in New Zealand is revealed to be somewhat different from that observed in the UK and USA. New Zealand has a relatively high proportion of conglomerate‐types (unrelated and very high diversity) and, hence, a reduced proportion of related diversified companies. This is of interest because most overseas research has shown the financial performance of related diversifiers to be superior to that of other companies. It is suggested that the New Zealand pattern may reflect principal‐agent relationships between owners and managers.