Does Corporate Diversification Increase Shareholder Value? The Case of Taiwan

Authors

  • Ilia Tetin I-Shou University
  • Elizaveta Antonenko South Ural State University

DOI:

https://doi.org/10.33423/jabe.v23i5.4565

Keywords:

business, economics, reinvestment activity, diversification, shareholder value, GMM

Abstract

We consider the effect of reinvestment on shareholder value to answer whether diversification decreases or increases shareholder value. We build static panel regression models for the sample of 1189 Taiwanese firms for 2009-2019. We also account for dynamic features associated with shareholder value and utilize Generalized Method of Moments estimates for a dynamic panel. There is robust evidence that reinvestment activity adds shareholder value. We also argue that current reinvestment activity leads to higher values of the closing price. Analysis reveals that the interaction effect of the normalized value of cash outflow and firm size leads to higher excess returns.

Downloads

Published

2021-09-16

How to Cite

Tetin, I., & Antonenko, E. (2021). Does Corporate Diversification Increase Shareholder Value? The Case of Taiwan. Journal of Applied Business and Economics, 23(5). https://doi.org/10.33423/jabe.v23i5.4565

Issue

Section

Articles