CORPORATE DIVERSIFICATION: DESTROYING OR INCREASING FIRM VALUE? AN EMPIRICAL EVIDENCE FROM INDONESIA

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Abstract

This study aims to investigate the influence of corporate diversification, family ownership and several control variables, i.e, leverage, tobin’s q, earnings growth, company size, company age, business segment, and business sectors (i.e, main sector, manufacturing sector, and service sector) on firm value in the Indonesian listed companies. By using five years (2011-2015) company data, this study uses OLS regression to test the hypotheses. The findings show that corporate diversification negatively influences on firm value, while family ownership does not have significant influence on firm value. Moreover, from the control variables, findings document that leverage and company size positively influence on firm value, while the rest of control variables do not have significant influence on firm value which is measured by excess value of the firm.

Keywords: Corporate Diversification, Family Ownership, Control Variables, Firm Value

How to cite this paper: Riswan, R., & Suyono, E. (2016). Corporate diversification: Destroying or increasing firm value? An empirical evidence from Indonesia. Corporate Ownership & Control, 14(1-4), 692-700. https://doi.org/10.22495/cocv14i1c4art16