DIVERSIFICATION STRATEGIC CHOICES AND ITS IMPLICATION ON FIRM PERFORMANCE

Sulastri, Sulastri and Isnurhadi, Isnurhadi (2008) DIVERSIFICATION STRATEGIC CHOICES AND ITS IMPLICATION ON FIRM PERFORMANCE. MFA 2008, Serawak, Malaysia, pp. 1-10.

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      Abstract

      A large number of studies about diversification conducted by many previous researches reveal differentresults. The phenomenon of company diversification in Indonesia occurred at the end of the eighties tothe middle of nineties. However, this phenomenon was dominated by a small groups of large with the significant growth of unrelated businesses. Furthermore, some large companies that diversified at the end of the eighties, most of them has divested their businesses at the medio of nineties that caused most of the largest companies conducted restructuring. Based on the literature review matched with the phenomeno above encourages the authors to conduct a study in order to clarify how the strategic choice implicates the related business or unrelated business toward market share, compensation, leverage, financial performance and shareholders.A sample of 155 companies in manufacturing, trade and property are used in this study with crossectional data of 2002. Multivariate analysis of variance with its assumption is used and data transformation is used for total assets. The test of model concordance analysis shows a level of significance > 0.05 to fulfill Manova assumption and equality of variance assumption test is performed for each variables to make sure that Manova analysys could be applied. This study reveals that all hypotheses about the implication of diversification on leverage are proven. It proves that leverage at unrelated business is greater than related business. The implication of diversification on market share shows that the more unrelated the business, the larger the market share. The implication of diversification on performance proves that the performance of related business is better than unrelate business. Shareholder value of related business creates larger market value than unrelated business. Business phenomenon in Indonesia clarifies that diversification strategic choice of related business creates more value than unrelated business and it supports some previous studies.

      Item Type: Book
      Uncontrolled Keywords: related, unrelated business, diversification, leverage, market share, compensation, firm performance, share-holder value. *Senior Lecturers at Faculty of Economics, Sriwijaya University
      Subjects: H Social Sciences > HG Finance
      Divisions: Faculty of Economics > Department of Management
      Depositing User: Isnurhadi, SE, MBA, Ph.D
      Date Deposited: 19 Mar 2014 11:57
      Last Modified: 19 Mar 2014 11:57
      URI: http://eprints.unsri.ac.id/id/eprint/3655

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