Diversification strategy, Ownership Structure, and Firm Value: a study of public‐listed firms in Indonesia
There is a hot debate on whether internationally diversified and or industrially diversified strategy gains premium or discount on firm value. Most of the empirical studies on this topic were conducted in developed markets. However, Indonesia, as an emerging market, offers its unique characteristi...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Munich University Library
2014
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| Subjects: | |
| Online Access: | http://ir.unimas.my/id/eprint/18134/ http://ir.unimas.my/id/eprint/18134/1/Rayenda.pdf |
| _version_ | 1848838445106987008 |
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| author | Brahmana, Rayenda Khresna Doddy, Setiawan Chee, Wooi Hooy |
| author_facet | Brahmana, Rayenda Khresna Doddy, Setiawan Chee, Wooi Hooy |
| author_sort | Brahmana, Rayenda Khresna |
| building | UNIMAS Institutional Repository |
| collection | Online Access |
| description | There is a hot debate on whether internationally diversified and or industrially diversified strategy
gains premium or discount on firm value. Most of the empirical studies on this topic were conducted
in developed markets. However, Indonesia, as an emerging market, offers its unique characteristic in
terms of ownership structure. For instance, Indonesia is dominated by family firms, but its SOEs
perform better compared to family firms. This research aims to investigate the role of ownership
concentration on the value of international and industrial diversification in Indonesia. We investigate
how that relationship works in respect of different firm’s identity, such as different ownership level,
or different owners (family, government, and foreign). We investigate the value of diversification and
ownership structure of Indonesian listed firms over a panel of 2006-2010. We use robust panel
regression where we report the probability values based on white robust standard errors that control
for heteroscedasticity errors, as well as firm clustering, year clustering, period effect, and industry
effect, which induce a within firm serial correlation error structure. To support the results, we also
provide graphical evidence of the link between ownership structure, diversification strategy, and firm
value. We find that ownership concentration has a prevalent and significant effect on the value of
diversification. Further, we also find value discount in the industrial diversification of family firms,
and value discount in the international diversification of foreign firms. Overall, our results are
consistent with the conjecture that the value of diversification is adversely affected by the agency
problem, suggesting that ownership concentration and firm identity play an important role in respect
of the value of diversification. |
| first_indexed | 2025-11-15T06:55:40Z |
| format | Article |
| id | unimas-18134 |
| institution | Universiti Malaysia Sarawak |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T06:55:40Z |
| publishDate | 2014 |
| publisher | Munich University Library |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | unimas-181342022-01-25T08:42:14Z http://ir.unimas.my/id/eprint/18134/ Diversification strategy, Ownership Structure, and Firm Value: a study of public‐listed firms in Indonesia Brahmana, Rayenda Khresna Doddy, Setiawan Chee, Wooi Hooy H Social Sciences (General) HG Finance There is a hot debate on whether internationally diversified and or industrially diversified strategy gains premium or discount on firm value. Most of the empirical studies on this topic were conducted in developed markets. However, Indonesia, as an emerging market, offers its unique characteristic in terms of ownership structure. For instance, Indonesia is dominated by family firms, but its SOEs perform better compared to family firms. This research aims to investigate the role of ownership concentration on the value of international and industrial diversification in Indonesia. We investigate how that relationship works in respect of different firm’s identity, such as different ownership level, or different owners (family, government, and foreign). We investigate the value of diversification and ownership structure of Indonesian listed firms over a panel of 2006-2010. We use robust panel regression where we report the probability values based on white robust standard errors that control for heteroscedasticity errors, as well as firm clustering, year clustering, period effect, and industry effect, which induce a within firm serial correlation error structure. To support the results, we also provide graphical evidence of the link between ownership structure, diversification strategy, and firm value. We find that ownership concentration has a prevalent and significant effect on the value of diversification. Further, we also find value discount in the industrial diversification of family firms, and value discount in the international diversification of foreign firms. Overall, our results are consistent with the conjecture that the value of diversification is adversely affected by the agency problem, suggesting that ownership concentration and firm identity play an important role in respect of the value of diversification. Munich University Library 2014 Article PeerReviewed text en http://ir.unimas.my/id/eprint/18134/1/Rayenda.pdf Brahmana, Rayenda Khresna and Doddy, Setiawan and Chee, Wooi Hooy (2014) Diversification strategy, Ownership Structure, and Firm Value: a study of public‐listed firms in Indonesia. Munich Personal RePEc Archive. ISSN 2285-6803 https://mpra.ub.uni-muenchen.de/64607/ |
| spellingShingle | H Social Sciences (General) HG Finance Brahmana, Rayenda Khresna Doddy, Setiawan Chee, Wooi Hooy Diversification strategy, Ownership Structure, and Firm Value: a study of public‐listed firms in Indonesia |
| title | Diversification strategy, Ownership Structure, and Firm Value: a study of public‐listed firms in Indonesia |
| title_full | Diversification strategy, Ownership Structure, and Firm Value: a study of public‐listed firms in Indonesia |
| title_fullStr | Diversification strategy, Ownership Structure, and Firm Value: a study of public‐listed firms in Indonesia |
| title_full_unstemmed | Diversification strategy, Ownership Structure, and Firm Value: a study of public‐listed firms in Indonesia |
| title_short | Diversification strategy, Ownership Structure, and Firm Value: a study of public‐listed firms in Indonesia |
| title_sort | diversification strategy, ownership structure, and firm value: a study of public‐listed firms in indonesia |
| topic | H Social Sciences (General) HG Finance |
| url | http://ir.unimas.my/id/eprint/18134/ http://ir.unimas.my/id/eprint/18134/ http://ir.unimas.my/id/eprint/18134/1/Rayenda.pdf |