This study aims to investigate how common institutional ownership influences business diversification strategies in the tourism and hospitality sector, with a focus on whether common institutional owners (CIOs) shape firms’ choices between related and unrelated diversification.
The analysis uses panel data on US publicly listed the tourism and hospitality (T&H) firms from 1999 to 2023. Fixed-effects Ordinary Least Squares regressions with clustered robust standard errors and propensity score matching are applied to address firm-level heterogeneity and potential selection bias.
Results show that firms with CIO presence are significantly more likely to engage in related diversification, expanding into areas aligned with their core operations. Moreover, the extent of related diversification intensifies with greater CIO exposure. These findings suggest that CIOs’ investment decisions are influenced by risk considerations and systematically shape firms’ diversification behaviors.
The study extends diversification research by linking modern portfolio theory with strategic management in an industry characterized by volatility and interdependence. It highlights the importance of incorporating industry-specific dynamics into theoretical and empirical work, offering new insights for scholars, investors and practitioners in the T&H sector.
