Corporate Diversification, Managerial Ownership, and Firm Value: Evidence from the Thai Financial Crisis

31 Pages Posted: 7 Mar 2011

See all articles by Charlie Charoenwong

Charlie Charoenwong

Nanyang Technological University (NTU)

David K. Ding

Singapore Management University - Lee Kong Chian School of Business

Pornsit Jiraporn

Pennsylvania State University - School of Graduate Professional Studies (SGPS)

Date Written: March 3, 2011

Abstract

This study investigates whether corporate diversification in Thailand led to value creation or destruction. The evidence shows that, like studies in developed countries, companies listed on the Stock Exchange of Thailand (SET), on average, experience a value loss of more than 10% through their corporate diversification. The results suggest that the value loss due to diversification stems from the presence of agency costs. The Asian Financial Crisis did not alter the propensity of Thai firms to diversify and that the level of managerial ownership in a firm is not affected by the Crisis.

Suggested Citation

Charoenwong, Charlie and Ding, David K. and Jiraporn, Pornsit, Corporate Diversification, Managerial Ownership, and Firm Value: Evidence from the Thai Financial Crisis (March 3, 2011). Available at SSRN: https://ssrn.com/abstract=1776485 or http://dx.doi.org/10.2139/ssrn.1776485

Charlie Charoenwong

Nanyang Technological University (NTU) ( email )

Nanyang Business School, BF Division
S3-01c-104
Singapore, 639798
Singapore
+65 6790 4799 (Phone)
+65 6791 3697 (Fax)

David K. Ding

Singapore Management University - Lee Kong Chian School of Business ( email )

50 Stamford Road
Singapore, 178899
Singapore
+65 6828-0245 (Phone)

Pornsit Jiraporn (Contact Author)

Pennsylvania State University - School of Graduate Professional Studies (SGPS) ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
(484) 753-3655 (Phone)

HOME PAGE: http://www.personal.psu.edu/pxj11/index1.html

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