Diversification's Effect on Firm value, the case of Taiwanese Listed Companies

• Main Authors: KAI-CHEN LIU, 劉凱禎
• Other Authors: Ming- Long Wang
• Format: Others
• Language: zh-TW
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/63664301735059635747

碩士 === 國立成功大學 === 財務金融研究所 === 97 === The purpose of this paper is to examine the effect of industrial diversification on the value of the firms .We obtain data from Annual Report of listed companies in Taiwan, during the period 1995 to 2006. With the help of Standard Industrial Classification System of the Republic of China (CSIC) and our sample selection rules, we complete the necessary database. We seek to test those effects by using the excess value developed in Berger and Ofek (1995). Consistent with previous studies, we find that industrial diversification has value-reducing effects. The major empirical results are as followed. Firstly, industrially diversified firms have value-reducing effects. Secondly, unrelated industrially diversified firms have more value-reducing effects than related diversified firms. Thirdly, the industrially diversified firms of the electronics industry have more value-reducing effects than industrially diversified firms of the non-electronics industry. Hence, we find that industrial diversification have value-reducing effects in Taiwan. Moreover, the value-reducing effects are worse in electronics industry than in the non-electronics industry.