Corporate diversification,ownership structure,and firm value: The Singapore evidence |
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| Institution: | 1. Department of Finance and Business Law, University of Wisconsin-Whitewater, Whitewater, WI 53190, USA;2. Department of Finance, East Carolina University, Greenville, NC 27858, USA;3. Department of Economics and Finance, The University of Texas Rio Grande Valley, Edinburg, TX 78539, USA;1. Department of Commerce, Finance and Shipping, Cyprus University of Technology, Cyprus;2. Durham University Business School - Durham University, United Kingdom;3. Strome College of Business - Old Dominion University, United States;4. Cambridge Judge Business School, University of Cambridge, United Kingdom;1. School of Management and Economics, Cyprus University of Technology, P.O. Box 50329, 3063, Limassol, Cyprus;2. Durham University Business School, Durham University, UK;1. Department of International Trade, Feng Chia University, Taichung, Taiwan;2. Discipline of Finance, Yuan Ze University, Taoyuan, Taiwan;3. Department of Finance, National Taiwan University, Taipei, Taiwan |
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| Abstract: | We provide international evidence on the level and value of corporate diversification using a sample of 145 Singapore firms. We find that the level of diversification is positively related to firm size and negatively related to the equity ownership of outside blockholders. However, we find no evidence that insider ownership has a significant impact on the level of diversification. We find significant value loss from diversification only for those firms with low managerial ownership, suggesting that value-reducing diversification stems from agency problems. Outside block ownership does not have a significant impact on the value of diversification. Thus, while outside blockholders may act as a deterrent on the level of diversification, there is no evidence that they can effectively reduce the agency problems for those firms with low managerial ownership. |
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