Heterogeneity in Business Groups and the Corporate Diversification - Firm Performance Relationship

37 Pages Posted: 5 Jun 2011 Last revised: 23 Nov 2012

See all articles by Rejie George

Rejie George

Indian Institute of Management Bangalore

Rezaul Kabir

University of Twente - Department of Finance and Accounting

Date Written: June 1, 2011

Abstract

This article examines how heterogeneous features among business groups influence the corporate diversification – firm performance relationship. The study classifies heterogeneity along three dimensions: group size, group diversity, and share ownership. Using a sample of firms from India, the study finds some evidence that for firms affiliated to larger business groups, corporate diversification enhances firm performance. However, business group diversity does not influence the diversification – performance relationship. The impact of diversification on firm performance differs substantially owing to the heterogeneity in share ownership. The paper documents an interesting interplay between business group and ownership structure.

Keywords: Corporate diversification; firm performance; business groups, ownership structure

JEL Classification: G30, G34, L22, L25

Suggested Citation

George, Rejie and Kabir, Rezaul, Heterogeneity in Business Groups and the Corporate Diversification - Firm Performance Relationship (June 1, 2011). Journal of Business Research, Vol. 65, No. 3, 2012. Available at SSRN: https://ssrn.com/abstract=1857923 or http://dx.doi.org/10.2139/ssrn.1857923

Rejie George

Indian Institute of Management Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India
+91-80-26993042 (Phone)
+91-80-26584050 (Fax)

Rezaul Kabir (Contact Author)

University of Twente - Department of Finance and Accounting ( email )

Faculty of Behavioral, Management & Social Science
P. O. Box 217
Enschede, 7500 AE
Netherlands
+31 53 489 4512 (Phone)
+31 53 489 2159 (Fax)

HOME PAGE: http://https://people.utwente.nl/r.kabir

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