This paper examines the relationship between Tobin's q and corporate diversification, finding a negative correlation. Diversified firms have lower q values than specialized firms, even when controlling for other factors. The negative relationship holds throughout the 1980s and is consistent across firms that maintain or change their number of segments. The results suggest that firms diversify when internal growth opportunities are exhausted, rather than diversification providing intangible value. Industry effects account for part of the diversification discount, but even after adjusting for industry, the discount remains significant. The study also finds that firms with more segments have lower q values than those with fewer segments. The results are robust to various controls, including firm size, access to capital markets, and R&D intensity. The paper concludes that diversified firms are valued lower than specialized firms, and that the diversification discount is economically and statistically significant throughout the 1980s. The findings challenge the view that diversification is a valuable intangible asset.This paper examines the relationship between Tobin's q and corporate diversification, finding a negative correlation. Diversified firms have lower q values than specialized firms, even when controlling for other factors. The negative relationship holds throughout the 1980s and is consistent across firms that maintain or change their number of segments. The results suggest that firms diversify when internal growth opportunities are exhausted, rather than diversification providing intangible value. Industry effects account for part of the diversification discount, but even after adjusting for industry, the discount remains significant. The study also finds that firms with more segments have lower q values than those with fewer segments. The results are robust to various controls, including firm size, access to capital markets, and R&D intensity. The paper concludes that diversified firms are valued lower than specialized firms, and that the diversification discount is economically and statistically significant throughout the 1980s. The findings challenge the view that diversification is a valuable intangible asset.