Related and unrelated diversification strategy on performance / Wan Mohd Nazri Wan Daud

Diversification strategy has been debated in the fields of strategic management and finance. Inconclusive evidences pertaining to the effect of diversification strategy and debt on performance prevail in developed countries. Some studies suggest doing empirical research in developing countries to se...

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Main Author:	Wan Daud, Wan Mohd Nazri
Format:	Thesis
Language:	English
Published:	2014
Online Access:	http://ir.uitm.edu.my/id/eprint/16493/ http://ir.uitm.edu.my/id/eprint/16493/1/ABS_WAN%20MOHD%20NAZRI%20WAN%20DAUD%20TDRA%20VOL%205%20IGS_14.pdf

id	uitm-16493
recordtype	eprints
spelling	uitm-164932018-10-02T07:48:22Z http://ir.uitm.edu.my/id/eprint/16493/ Related and unrelated diversification strategy on performance / Wan Mohd Nazri Wan Daud Wan Daud, Wan Mohd Nazri Diversification strategy has been debated in the fields of strategic management and finance. Inconclusive evidences pertaining to the effect of diversification strategy and debt on performance prevail in developed countries. Some studies suggest doing empirical research in developing countries to search for fresh evidence to validate those claims. This study examines the effect of diversification and debt usage on performance. Multiple proxies of performance are used namely market, economic, risk adjusted and accounting measurements in order to select the best proxy to explain the relationship among variables. The method deployed is panel data analysis on a sample of 76 Malaysian firms from various industries for the period of 1994 to 2007. These firms were then classified into 32 related firms and 44 unrelated firms based on type of diversification adopted. Independent variables such as cash flow, capital expenditure, liquidity and size were employed to provide robust evidence pertaining to the relationship between diversification, debt and performance. In addition to using the whole sample, the study also divides it into two periods: pre- and post-crisis. In determining the relationship among variables, multiple regressions were used. The results for all samples do not support the view that debt can be used to enhance performance once the unrelated diversification strategy is implemented. Similarly, debt also is not a factor that can be used to enhance performance in related diversified firms. The results remain consistent for the pre- and post-crisis periods where no significant relationship exists between diversification strategy and performance. The evidence suggests that debt clearly has a negative impact on performance. Therefore, firms should put extra caution in using debt as their financing choice. Apart from that, firms should also monitor other factors that may have a significant impact on performance such as cash flow. Future studies should explore international diversification strategy to investigate whether debt could enhance performance once unrelated strategy has lowered firm’s business risk. 2014 Thesis NonPeerReviewed text en http://ir.uitm.edu.my/id/eprint/16493/1/ABS_WAN%20MOHD%20NAZRI%20WAN%20DAUD%20TDRA%20VOL%205%20IGS_14.pdf Wan Daud, Wan Mohd Nazri (2014) Related and unrelated diversification strategy on performance / Wan Mohd Nazri Wan Daud. PhD thesis, Universiti Teknologi MARA.
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Teknologi MARA
building	UiTM Institutional Repository
collection	Online Access
language	English
description	Diversification strategy has been debated in the fields of strategic management and finance. Inconclusive evidences pertaining to the effect of diversification strategy and debt on performance prevail in developed countries. Some studies suggest doing empirical research in developing countries to search for fresh evidence to validate those claims. This study examines the effect of diversification and debt usage on performance. Multiple proxies of performance are used namely market, economic, risk adjusted and accounting measurements in order to select the best proxy to explain the relationship among variables. The method deployed is panel data analysis on a sample of 76 Malaysian firms from various industries for the period of 1994 to 2007. These firms were then classified into 32 related firms and 44 unrelated firms based on type of diversification adopted. Independent variables such as cash flow, capital expenditure, liquidity and size were employed to provide robust evidence pertaining to the relationship between diversification, debt and performance. In addition to using the whole sample, the study also divides it into two periods: pre- and post-crisis. In determining the relationship among variables, multiple regressions were used. The results for all samples do not support the view that debt can be used to enhance performance once the unrelated diversification strategy is implemented. Similarly, debt also is not a factor that can be used to enhance performance in related diversified firms. The results remain consistent for the pre- and post-crisis periods where no significant relationship exists between diversification strategy and performance. The evidence suggests that debt clearly has a negative impact on performance. Therefore, firms should put extra caution in using debt as their financing choice. Apart from that, firms should also monitor other factors that may have a significant impact on performance such as cash flow. Future studies should explore international diversification strategy to investigate whether debt could enhance performance once unrelated strategy has lowered firm’s business risk.
format	Thesis
author	Wan Daud, Wan Mohd Nazri
spellingShingle	Wan Daud, Wan Mohd Nazri Related and unrelated diversification strategy on performance / Wan Mohd Nazri Wan Daud
author_facet	Wan Daud, Wan Mohd Nazri
author_sort	Wan Daud, Wan Mohd Nazri
title	Related and unrelated diversification strategy on performance / Wan Mohd Nazri Wan Daud
title_short	Related and unrelated diversification strategy on performance / Wan Mohd Nazri Wan Daud
title_full	Related and unrelated diversification strategy on performance / Wan Mohd Nazri Wan Daud
title_fullStr	Related and unrelated diversification strategy on performance / Wan Mohd Nazri Wan Daud
title_full_unstemmed	Related and unrelated diversification strategy on performance / Wan Mohd Nazri Wan Daud
title_sort	related and unrelated diversification strategy on performance / wan mohd nazri wan daud
publishDate	2014
url	http://ir.uitm.edu.my/id/eprint/16493/ http://ir.uitm.edu.my/id/eprint/16493/1/ABS_WAN%20MOHD%20NAZRI%20WAN%20DAUD%20TDRA%20VOL%205%20IGS_14.pdf
first_indexed	2023-09-18T22:56:12Z
last_indexed	2023-09-18T22:56:12Z
_version_	1777417870142078976

Related and unrelated diversification strategy on performance / Wan Mohd Nazri Wan Daud

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