| Summary: | 碩士 === 雲林科技大學 === 應用外語系碩士班 === 97 === This study was designed to investigate the relationship between corporate diversification and company age, as well as the relationships between diversification and performance and risk. Prior research on diversification has borrowed the concept of entropy to measure a firm’s degree of diversification (Chatterjee & Blocher, 1992; Choi & Russell, 2005). This research was aimed at furthering this concept to scrutinize the implication of entropy on diversification, risk and performance. The sample used for this study was extracted from Compustat North America database of Standard and Poor’s 500 companies from 2000 to 2006. Performance was measured by return on assets and risk was measured by variance of net profit margins over the prior five-year period of each measured year. A significant, positive relationship between a company’s age and the decision to diversity was found (p < .01). Also, diversification was found to be negatively related to performance (p < .01) and risk (p < .05). These findings should provide managers insights in developing diversification strategies. Instead of controlling diversification development, managers need to focus on changes in the market and on their diversified sub-unit’s performance.
|
|---|
