EFFECTS OF CORPORATE DIVERSIFICATION ON FIRM EXCESS VALUE IN MALAYSIA: A STUDY ON MALAYSIAN LISTED COMPANIES
This paper examines whether corporate diversification will have any effects on firm excess value in Malaysia and whether diversification will enhance the firm value when companies diversify to more segments. The findings reveal that diversification destroys firm excess value in Malaysia during year 2006 to 2008. Furthermore, the higher of a firm’s diversification level, the lower firm value it has, suggesting single-segmented firms in Malaysia perform better than multi-segmented firms. The Malaysian firms should therefore invest surplus fund in their core business operations as diversification does not add value to portfolio.
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