The Impact of Business Diversification on Performance of IDX Listed Firms
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Universitas Indonesia
2013-07-01
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| Series: | Indonesian Capital Market Review |
| Online Access: | http://journal.ui.ac.id/index.php/icmr/article/view/1902 |
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mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} --> <!--[endif] --> <p class="MsoNormal" style="margin-bottom: .0001pt; text-align: justify; tab-stops: 70.9pt;"><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif";">This study analyzes </span><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif"; mso-ansi-language: IN;" lang="IN">the </span><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif";">correlation between business diversification </span><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif"; mso-ansi-language: IN;" lang="IN">and </span><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif";">performances</span><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif"; mso-ansi-language: IN;" lang="IN"> in Indonesian listed companies from</span><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif";"> 2006-2011. In addition to observing business diversification impact on company’s performance in term of Return on Assets (ROA) and Tobin’s Q, this research also observe</span><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif"; mso-ansi-language: IN;" lang="IN">s</span><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif";"> the business diversification impact on the performances of different companies at different level. The result of this research indicates that diversification gives negative effect to ROA and Tobin’s Q, while for higher level of diversification, the effect on Tobin’s Q is relatively high. The negative effect of diversification on ROA is higher in the group of companies with higher ROA. The different results show </span><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif"; mso-ansi-language: IN;" lang="IN">that </span><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif";">when using Tobin’s Q as a measure of companies’ performances, diversification give</span><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif"; mso-ansi-language: IN;" lang="IN">s</span><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif";"> negative impact to companies’ performance in the intermediate level. </span></p> <p class="MsoNormal" style="text-align: justify; tab-stops: 70.9pt;"><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="text-align: justify; tab-stops: 70.9pt;"><strong style="mso-bidi-font-weight: normal;"><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif";">Keywords:</span></strong><span style="font-size: 12.0pt; line-height: 115%; font-family: "Times New Roman","serif";"> Diversification, companies’ performance, ROA, quantile regression, Tobin’s Q</span></p> |
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| ISSN: | 1979-8997 2356-3818 |