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The Effects of International and Industrial Diversification on Firm Value: Evidence from Turkey

Yıl 2022, Cilt 17, Sayı 2, 519 - 534, 01.08.2022

Öz

This study determined that international diversification does not have significant effect on the value of the firms operating in manufacturing sector among the firms listed in the Borsa Istanbul Equity Market; however, that the industrial diversification increases the firm value by using the “Excess Value Methodology” developed by Berger and Ofek (1995) and modified by Fauver et al (2004). Acquired diversification premiums were also observed to continue in case of control of institutional investors’ share ownership; in addition, a positive relation was found between institutional investors’ share ownership and firm value at low share ownership, while it is negative in high ownership rates.

Kaynakça

  • Al‐Maskati, N.; Bate, A.J.; Bhabra, G.S. (2015), “Diversification, corporate governance and firm value in small markets: evidence from New Zealand”, Accounting & Finance, Vol. 55, No. 3: 627-657.
  • Amihud, Y.; Lev, B. (1981), “Risk reduction as a managerial motive for conglomerate mergers”, The Bell Journal of Economics, Vol. 12, No. 2: 605-617.
  • Attig, N.; Cleary, S.; El Ghoul, S.; Guedhami, O. (2012), “Institutional investment horizon and investment–cash flow sensitivity”, Journal of Banking & Finance, Vol. 36, No. 4: 1164–1180.
  • Baltagi, B.H.; Jung, B.C.; Song, S.H. (2010), “Testing for heteroskedasticity and serial correlation in a random effects panel data model”, Journal of Econometrics, Vol. 154, No. 2: 122-124.
  • Berger, P.G.; Ofek. E. (1995), “Diversification’s effect on firm value”, Journal of Financial Economics, Vol. 37, No. 1: 39-65.
  • Bodnar, G.M.; Tang, C.; Weintrop, J. (1997), “Both sides of corporate diversification: The value impacts of geographic and industrial diversification”, NBER Working Paper No. 6224, Cambridge, October.
  • Borah, N.; Pan, L.; Park, J.C.; Shao, N. (2018), “Does corporate diversification reduce value in high technology firms?”, Review of Quantitative Finance and Accounting, Vol. 51, No. 3: 683-718.
  • Brewer, H.L. (1981), “Investor benefits from corporate international diversification”, Journal of Financial and Quantitative Analysis, Vol. 16, No. 1: 113-126.
  • Caves, R. E. (1971), “International corporations: The industrial economics of foreign investment”, Economica, Vol. 38, No. 149: 1-27.
  • Chen, C.-J.; Yu, C.-M.J. (2012), “Managerial ownership, diversification, and firm performance: Evidence from an emerging market”, International Business Review, Vol. 21, No. 3: 518–534.
  • Chen, S.-S.; Ho, K. W. (2000), “Corporate diversification, ownership structure, and firm value The Singapore evidence”, International Review of Financial Analysis, Vol. 9, No. 3: 315-326.
  • Cho, K.R. (2017), “The impacts of international diversification, product diversification, and organizational learning capability on firm value: evidence from Korean firms”, Journal of Contemporary Management, Vol. 6, No.1: 39-50.
  • Choe, C.; Dey, T.; Mishra. V. (2014), “Corporate diversification, executive compensation and firm value: Evidence from Australia”, Australian Journal of Management, Vol. 39, No. 3: 395-414.
  • Claessens, S.; Djankov, S.; Fan, J.; Lang, L. (2001), “The pattern and valuation effects of corporate diversification: A comparison of the United States, Japan, and Other East Asian Economies”, Discussion Paper No. 2001/127, Helsinki: UNU-WIDER.
  • Denis, D.J.; Denis, D.K.; Yost, K. (1999), “Global diversification, industrial diversification, and firm value”, Purdue CIBER Working Paper No. 141.
  • Denis, D.J.; Denis, D.K.; Yost, K. (2002), “Global diversification, industrial diversification, and firm value”, The Journal of Finance, Vol. 57, No. 5: 1951-1979.
  • Denis, D.J.; Denis, D.K.; Sarin, A. (1997), “Agency problems, equity ownership, and corporate diversification”, The Journal of Finance, Vol. 52, No. 1: 135-160.
  • Dunning, J.H. (1973), “The determinants of international production”, Oxford Economic Papers, Vol. 25, No. 3: 289-336.
  • Errunza, V.R.; Senbet. L.W. (1981), “The effects of international operations on the market value of the firm: Theory and evidence”, The Journal of Finance, Vol. 36, No. 2: 401-17.
  • Errunza, V.R.; Senbet, L.W. (1984), “International corporate diversification, market valuation, and size-adjusted evidence”, The Journal of Finance, Vol. 39, No. 3: 727-743.
  • Fatemi, A.M. (1984), “Shareholder benefits from corporate international diversification”, The Journal of Finance, Vol. 39, No. 5: 1325-1344.
  • Fauver, L.; Houston, J.F.; Naranjo, A. (2004), “Cross-country evidence on the value of corporate industrial and international diversification”, Journal of Corporate Finance, Vol. 10, No. 5: 729–752.
  • Fauver, L.; Houston, J.; Naranjo. A. (2003), “Capital market development, international integration, legal systems, and the value of corporate diversification: A cross-country analysis”, Journal of Financial and Quantitative Analysis, Vol. 38, No. 1: 135-158.
  • Huaping, S.; Yong, G.; Weifeng, S.; Yusheng, K. (2016), “Firm internationalization, diversification and corporate value: empirical evidence from listed Chinese corporations”, Management Science and Engineering, Vol. 10, No. 3: 46-54.
  • Jafarinejad, M.; Jory, S.R.; Ngo, T.N. (2015), “The effects of institutional ownership on the value and risk of diversified firms”, International Review of Financial Analysis, Vol. 40: 207–219.
  • Jensen, M.C. (1986), “Agency costs of free cash flow, corporate finance, and takeovers”, The American Economic Review, Vol. 76, No. 2: 323-329.
  • Jensen, M.C.; Meckling, W.H. (1976), “Theory of the firm: managerial behavior, agency costs and ownership structure”, Journal of Financial Economics, Vol. 3, No. 4: 305-360.
  • Kim, W.S.; Lyn, E.O. (1986), “Excess market value, the multinational corporation, and Tobin's q-ratio”, Journal of International Business Studies, Vol. 17, No. 1: 119-25.
  • Kim, Y.S.; Mathur, I. (2008), “The impact of geographic diversification on firm performance”, International Review of Financial Analysis, Vol. 17, No. 4: 747-766.
  • Lang, L.H.P.; Stulz, R.M. (1994), “Tobin's q, corporate diversification, and firm performance”, Journal of Political Economy, Vol. 102, No. 6: 1248-1280.
  • Lee, K.-T.; Hooy, C.-W.; Hooy, G.-K. (2012), “The value impact of international and industrial diversifications on public‐listed firms in Malaysia”, Emerging Markets Review, Vol. 13, No. 3: 366–380.
  • Lins, K.V.; Servaes, H. (2002), “Is corporate diversification beneficial in emerging markets?”, Financial Management, Vol. 3, No. 2: 5-31.
  • Lins, K.; H. Servaes. 1999. International evidence on the value of corporate diversification. The Journal of Finance, Vol. 54, No. 6: 2215-2239.
  • Mackey, T.B.; Barney, J.B.; Dotson, J.P. (2017), “Corporate diversification and the value of individual firms: A Bayesian approach”, Strategic Management Journal, Vol. 38, No. 2: 322-341.
  • Michel, A.; Shaked, I. (1986), “Multinational corporations vs. domestic corporations: Financial performance and characteristics”, Journal of International Business Studies, Vol. 17, No. 3: 89-100.
  • Mikhail, A.D.; Shawky, H.A. (1979), “Investment performance of US-based multinational corporations”, Journal of International Business Studies, Vol. 10, No. 1: 53-66.
  • Morck, R.; Yeung, B. (1991), “Why Investors Value Multinationality”, The Journal of Business, Vol. 64, No. 2: 165-187.
  • Morck, R.; Yeung, B. (1997), “Why investors sometimes value size and diversification: the internalization theory of synergy”, Discussion Paper No. 411, Research Seminar in International Economics, University of Michigan, 5 September.
  • Navissi, F.; Naiker. V. (2006), “Institutional ownership and corporate value”, Managerial Finance, Vol. 32, No. 3: 247-256.
  • Panangian, B.; Siregar, S.V. (2019), “The effect of diversification on firm performance: the role of family ownership”, Advances in Economics, Business and Management Research, Vol. 101: 297-302.
  • Rajan, R.; Servaes, H.; Zingales, L. (2000), “The cost of diversity: The diversification discount and inefficient investment”, The Journal of Finance, Vol. 55, No. 1: 35-80.
  • Rong, Z.; Xiao, S. (2017), “Innovation‐Related Diversification and Firm Value”, European Financial Management, Vol. 23, No. 3: 475-518.
  • Schmid, M.M.; Walter, I. (2012), “Geographic diversification and firm value in the financial services industry”, Journal of Empirical Finance, Vol. 19, No. 1; 109–122.
  • Selcuk, E.A. (2015), “Corporate diversification and firm value: evidence from emerging markets”, International Journal of Emerging Markets, Vol. 10, No. 3: 294-310.
  • Servaes, H. (1996), “The value of diversification during the conglomerate merger wave”, The Journal of Finance, Vol. 51, No. 4: 1201-25.
  • Stulz, R. (1990), “Managerial discretion and optimal financing policies”, Journal of financial Economics Vol. 26, No. 1: 3-27.
  • Volkov, N.I.; Smith, G.C. (2015), “Corporate diversification and firm value during economic downturns”, The Quarterly Review of Economics and Finance, Vol. 55: 160-75.
  • Weston, J.F. (1969), “The nature and significance of conglomerate firms”, St. John's Law Review, Vol. 44, No. 5: 66-80.
  • Yucel, E. (2012), “The effects of corporate diversification on firm value, risk and performance: Turkey application”, Doctoral Dissertation, Çukurova University Institute of Social Sciences, Adana.

Uluslararası ve Endüstriyel Çeşitlendirmenin Firma Değeri Üzerindeki Etkileri: Türkiye Örneği

Yıl 2022, Cilt 17, Sayı 2, 519 - 534, 01.08.2022

Öz

Bu çalışma, Berger ve Ofek (1995) tarafından geliştirilen ve Fauver vd. (2004) tarafından modifiye edilen “Artık Değer Metodolojisi”ni kullanarak, Borsa İstanbul Pay Piyasası’nda işlem gören firmalardan İmalat Sektöründe yer alan firmalar için uluslararası çeşitlendirmenin firma değeri üzerinde herhangi bir anlamlı etkiye sahip olmadığını bununla birlikte endüstriyel çeşitlendirmenin firma değerlerini artırdığını tespit etmiştir. Elde edilen çeşitlendirme priminin, firmaların kurumsal yatırımcılarının sahiplik yapısı paylarının kontrol edilmesi durumunda da devam ettiği gözlenmiş; bununla birlikte, kurumsal yatırımcıların firma değeri ile düşük sahiplik oranlarında pozitif, yüksek sahiplik oranlarında ise negatif ilişkili olduğu belirlenmiştir.

Kaynakça

  • Al‐Maskati, N.; Bate, A.J.; Bhabra, G.S. (2015), “Diversification, corporate governance and firm value in small markets: evidence from New Zealand”, Accounting & Finance, Vol. 55, No. 3: 627-657.
  • Amihud, Y.; Lev, B. (1981), “Risk reduction as a managerial motive for conglomerate mergers”, The Bell Journal of Economics, Vol. 12, No. 2: 605-617.
  • Attig, N.; Cleary, S.; El Ghoul, S.; Guedhami, O. (2012), “Institutional investment horizon and investment–cash flow sensitivity”, Journal of Banking & Finance, Vol. 36, No. 4: 1164–1180.
  • Baltagi, B.H.; Jung, B.C.; Song, S.H. (2010), “Testing for heteroskedasticity and serial correlation in a random effects panel data model”, Journal of Econometrics, Vol. 154, No. 2: 122-124.
  • Berger, P.G.; Ofek. E. (1995), “Diversification’s effect on firm value”, Journal of Financial Economics, Vol. 37, No. 1: 39-65.
  • Bodnar, G.M.; Tang, C.; Weintrop, J. (1997), “Both sides of corporate diversification: The value impacts of geographic and industrial diversification”, NBER Working Paper No. 6224, Cambridge, October.
  • Borah, N.; Pan, L.; Park, J.C.; Shao, N. (2018), “Does corporate diversification reduce value in high technology firms?”, Review of Quantitative Finance and Accounting, Vol. 51, No. 3: 683-718.
  • Brewer, H.L. (1981), “Investor benefits from corporate international diversification”, Journal of Financial and Quantitative Analysis, Vol. 16, No. 1: 113-126.
  • Caves, R. E. (1971), “International corporations: The industrial economics of foreign investment”, Economica, Vol. 38, No. 149: 1-27.
  • Chen, C.-J.; Yu, C.-M.J. (2012), “Managerial ownership, diversification, and firm performance: Evidence from an emerging market”, International Business Review, Vol. 21, No. 3: 518–534.
  • Chen, S.-S.; Ho, K. W. (2000), “Corporate diversification, ownership structure, and firm value The Singapore evidence”, International Review of Financial Analysis, Vol. 9, No. 3: 315-326.
  • Cho, K.R. (2017), “The impacts of international diversification, product diversification, and organizational learning capability on firm value: evidence from Korean firms”, Journal of Contemporary Management, Vol. 6, No.1: 39-50.
  • Choe, C.; Dey, T.; Mishra. V. (2014), “Corporate diversification, executive compensation and firm value: Evidence from Australia”, Australian Journal of Management, Vol. 39, No. 3: 395-414.
  • Claessens, S.; Djankov, S.; Fan, J.; Lang, L. (2001), “The pattern and valuation effects of corporate diversification: A comparison of the United States, Japan, and Other East Asian Economies”, Discussion Paper No. 2001/127, Helsinki: UNU-WIDER.
  • Denis, D.J.; Denis, D.K.; Yost, K. (1999), “Global diversification, industrial diversification, and firm value”, Purdue CIBER Working Paper No. 141.
  • Denis, D.J.; Denis, D.K.; Yost, K. (2002), “Global diversification, industrial diversification, and firm value”, The Journal of Finance, Vol. 57, No. 5: 1951-1979.
  • Denis, D.J.; Denis, D.K.; Sarin, A. (1997), “Agency problems, equity ownership, and corporate diversification”, The Journal of Finance, Vol. 52, No. 1: 135-160.
  • Dunning, J.H. (1973), “The determinants of international production”, Oxford Economic Papers, Vol. 25, No. 3: 289-336.
  • Errunza, V.R.; Senbet. L.W. (1981), “The effects of international operations on the market value of the firm: Theory and evidence”, The Journal of Finance, Vol. 36, No. 2: 401-17.
  • Errunza, V.R.; Senbet, L.W. (1984), “International corporate diversification, market valuation, and size-adjusted evidence”, The Journal of Finance, Vol. 39, No. 3: 727-743.
  • Fatemi, A.M. (1984), “Shareholder benefits from corporate international diversification”, The Journal of Finance, Vol. 39, No. 5: 1325-1344.
  • Fauver, L.; Houston, J.F.; Naranjo, A. (2004), “Cross-country evidence on the value of corporate industrial and international diversification”, Journal of Corporate Finance, Vol. 10, No. 5: 729–752.
  • Fauver, L.; Houston, J.; Naranjo. A. (2003), “Capital market development, international integration, legal systems, and the value of corporate diversification: A cross-country analysis”, Journal of Financial and Quantitative Analysis, Vol. 38, No. 1: 135-158.
  • Huaping, S.; Yong, G.; Weifeng, S.; Yusheng, K. (2016), “Firm internationalization, diversification and corporate value: empirical evidence from listed Chinese corporations”, Management Science and Engineering, Vol. 10, No. 3: 46-54.
  • Jafarinejad, M.; Jory, S.R.; Ngo, T.N. (2015), “The effects of institutional ownership on the value and risk of diversified firms”, International Review of Financial Analysis, Vol. 40: 207–219.
  • Jensen, M.C. (1986), “Agency costs of free cash flow, corporate finance, and takeovers”, The American Economic Review, Vol. 76, No. 2: 323-329.
  • Jensen, M.C.; Meckling, W.H. (1976), “Theory of the firm: managerial behavior, agency costs and ownership structure”, Journal of Financial Economics, Vol. 3, No. 4: 305-360.
  • Kim, W.S.; Lyn, E.O. (1986), “Excess market value, the multinational corporation, and Tobin's q-ratio”, Journal of International Business Studies, Vol. 17, No. 1: 119-25.
  • Kim, Y.S.; Mathur, I. (2008), “The impact of geographic diversification on firm performance”, International Review of Financial Analysis, Vol. 17, No. 4: 747-766.
  • Lang, L.H.P.; Stulz, R.M. (1994), “Tobin's q, corporate diversification, and firm performance”, Journal of Political Economy, Vol. 102, No. 6: 1248-1280.
  • Lee, K.-T.; Hooy, C.-W.; Hooy, G.-K. (2012), “The value impact of international and industrial diversifications on public‐listed firms in Malaysia”, Emerging Markets Review, Vol. 13, No. 3: 366–380.
  • Lins, K.V.; Servaes, H. (2002), “Is corporate diversification beneficial in emerging markets?”, Financial Management, Vol. 3, No. 2: 5-31.
  • Lins, K.; H. Servaes. 1999. International evidence on the value of corporate diversification. The Journal of Finance, Vol. 54, No. 6: 2215-2239.
  • Mackey, T.B.; Barney, J.B.; Dotson, J.P. (2017), “Corporate diversification and the value of individual firms: A Bayesian approach”, Strategic Management Journal, Vol. 38, No. 2: 322-341.
  • Michel, A.; Shaked, I. (1986), “Multinational corporations vs. domestic corporations: Financial performance and characteristics”, Journal of International Business Studies, Vol. 17, No. 3: 89-100.
  • Mikhail, A.D.; Shawky, H.A. (1979), “Investment performance of US-based multinational corporations”, Journal of International Business Studies, Vol. 10, No. 1: 53-66.
  • Morck, R.; Yeung, B. (1991), “Why Investors Value Multinationality”, The Journal of Business, Vol. 64, No. 2: 165-187.
  • Morck, R.; Yeung, B. (1997), “Why investors sometimes value size and diversification: the internalization theory of synergy”, Discussion Paper No. 411, Research Seminar in International Economics, University of Michigan, 5 September.
  • Navissi, F.; Naiker. V. (2006), “Institutional ownership and corporate value”, Managerial Finance, Vol. 32, No. 3: 247-256.
  • Panangian, B.; Siregar, S.V. (2019), “The effect of diversification on firm performance: the role of family ownership”, Advances in Economics, Business and Management Research, Vol. 101: 297-302.
  • Rajan, R.; Servaes, H.; Zingales, L. (2000), “The cost of diversity: The diversification discount and inefficient investment”, The Journal of Finance, Vol. 55, No. 1: 35-80.
  • Rong, Z.; Xiao, S. (2017), “Innovation‐Related Diversification and Firm Value”, European Financial Management, Vol. 23, No. 3: 475-518.
  • Schmid, M.M.; Walter, I. (2012), “Geographic diversification and firm value in the financial services industry”, Journal of Empirical Finance, Vol. 19, No. 1; 109–122.
  • Selcuk, E.A. (2015), “Corporate diversification and firm value: evidence from emerging markets”, International Journal of Emerging Markets, Vol. 10, No. 3: 294-310.
  • Servaes, H. (1996), “The value of diversification during the conglomerate merger wave”, The Journal of Finance, Vol. 51, No. 4: 1201-25.
  • Stulz, R. (1990), “Managerial discretion and optimal financing policies”, Journal of financial Economics Vol. 26, No. 1: 3-27.
  • Volkov, N.I.; Smith, G.C. (2015), “Corporate diversification and firm value during economic downturns”, The Quarterly Review of Economics and Finance, Vol. 55: 160-75.
  • Weston, J.F. (1969), “The nature and significance of conglomerate firms”, St. John's Law Review, Vol. 44, No. 5: 66-80.
  • Yucel, E. (2012), “The effects of corporate diversification on firm value, risk and performance: Turkey application”, Doctoral Dissertation, Çukurova University Institute of Social Sciences, Adana.

Ayrıntılar

Birincil Dil İngilizce
Konular Sosyal
Bölüm Makaleler
Yazarlar

Semra BANK>
KARADENIZ TECHNICAL UNIVERSITY
0000-0001-6485-4388
Türkiye


Hüseyin ÜNAL>
KARADENIZ TECHNICAL UNIVERSITY
0000-0001-6323-1322
Türkiye


Yusuf GÜNEYSU> (Sorumlu Yazar)
TRABZON UNIVERSITY
0000-0002-6809-1995
Türkiye

Yayımlanma Tarihi 1 Ağustos 2022
Başvuru Tarihi 3 Mart 2022
Kabul Tarihi 1 Mayıs 2022
Yayınlandığı Sayı Yıl 2022, Cilt 17, Sayı 2

Kaynak Göster

APA Bank, S. , Ünal, H. & Güneysu, Y. (2022). The Effects of International and Industrial Diversification on Firm Value: Evidence from Turkey . Eskişehir Osmangazi Üniversitesi İktisadi ve İdari Bilimler Dergisi , 17 (2) , 519-534 . Retrieved from https://dergipark.org.tr/tr/pub/oguiibf/issue/70614/1082288