EFFECT OF CORPORATE DIVERSIFICATION ON THE VALUE OF CASH HOLDING

http://dx.doi.org/10.31703/ger.2023(VIII-IV).05      10.31703/ger.2023(VIII-IV).05      Published : Dec 4
Authored by : Idrees Ali Shah , Saleem Ullah Khan , Muhammad Fahad Siddiqi

05 Pages : 51-60

References

  • Alimov, A. (2014). Product market competition and the value of corporate cash: Evidence from trade liberalization. Journal of Corporate Finance, 25, 122‐139. https://doi.org/10.1016/j.jcorpfin.2013.11.011
  • Amihud, Y., & Lev, B. (1981).Risk reduction as a managerial motive for conglomerate mergers. The Bell Journal of Economics,12(2), 605‐617. https://doi.org/10.2307/3003575
  • Berger, P., & Ofek, E. (1995). Diversification's effect on firm value. Journal of Financial Economics, 37, 39–65. https://doi.org/10.1016/0304‐405X(94)00798‐6
  • Doukas, J. A., & Kan, O. B. (2006). Does global diversification destroy firm value? Journal of International Business Studies, 37 (3) .352‐371. https://www.jstor.org/stable/3875264
  • Dittmar, A., & Mahrt‐Smith, J. (2007). Corporate governance and the value of cash holdings. Journal of Financial Economics, 83, 599–634. https://doi.org/10.1016/j.jfineco.2005.12.006
  • Denis, D. J., Denis, D. K., & Sarin, A. (1997). Agency problems, equity ownership, and corporate diversification. The Journal of Finance, 52, 135–160. https://doi.org/10.1111/j.1540‐6261.1997.tb03811.x
  • Espinosa, C., Maquieira, C., Jara, M., & Vieito. (2018). Does corporate diversification create value in emerging markets? New evidence from Chile. Canadian Journal of Administrative Sciences, 35, 123‐135. https://doi.org/10.1002/cjas.1393
  • Faulkender, M., & Wang, R. (2006). Corporate financial policy and the value of cash, The Journal of Finance, 61, 1957–1990.
  • Glaser, A., & Müller, S. (2010). Is the diversification discount caused by the book value bias of debt? Journal of Banking and Finance, 34, 2307‐2317. https://doi.org/10.1016/j.jbankfin.2010.02.017
  • Hund, J., Monk, D., & Tice, S., (2010). Uncertainty about average profitability and the diversification discount. Journal of Financial Economics, 96, 463‐484. https://doi.org/10.1016/j.jfineco.2010.02.006
  • Hayat, R., & Hassan, M. K. (2017). Does an Islamic label indicate good corporate governance? Journal of Corporate Finance, 43, 159–174. https://doi.org/10.1016/j.jcorpfin.2016.12.012
  • Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance and takeovers. American Economic Review, 76, 323–339. https://ssrn.com/abstract=99580
  • Kuan, T. H., Li, C. S., & Chu, S. H. (2011). Cash holdings and CG in family‐oriented‐ controlled firms. Journal of Business Research, 64, 757‐764
  • Lang, L., & Stulz, R. (1994).Tobin's q, corporate diversification, and firm performance. The Journal of Political Economy, 102, 1248– 1280. https://www.jstor.org/stable/2138786
  • Lins, K. V., & Servaes, H. (2002).Is Corporate Diversification Beneficial in Emerging Markets? Financial Management, 31(1), 5‐ 31
  • Lins, K., & Servaes, H. (1999). International evidence on the value of corporate diversification. The Journal of Finance, 54 (6), 2215‐2239. https://www.jstor.org/stable/797992
  • 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, 13 (3), 366‐380. https://doi.org/10.1016/j.ememar.2012.06. 001
  • Rajan, R., Servaes, H., & Zingales, L. (2000). The cost of diversity: the diversification discount and inefficient investment. The Journal of Finance, 55, 35–80. https://www.jstor.org/stable/222550
  • Shah, I. A., & Shah, S. Z. A. (2018). Effect of corporate governance on Cash Holding: The Role of Product Market Competition. Nice research journal, 11, 39‐57. https://doi.org/10.51239/nrjss.v0i0.4
  • Shah, I. A., Shah, S. Z. A., Nouman, M., Khan, F. U., Badulescu, D., & Cismas, L. M. (2021). Corporate governance and cash holding: New insight from concentrated and competitive industries. Sustainability 13(9), 4816. https://doi.org/10.3390/su13094816
  • Ullah, S., Haroon, M., Hussain, S., & Rehman, U. A. (2022). Islamic labelling and corporate governance: a perspective of Shariah compliance firms. Journal of Islamic accounting and business, 14(5). https://doi.org/10.1108/JIABR‐03‐2021‐0108
  • Ullah, N., Abdul, W., & Nida, A. (2022). The nexus between Islamic label and firm value: evidence from cross country data. The journal of Asian finance, economics and business, 9(4), 409‐417. https://doi.org/10.13106/jafeb.2022.vol9.no4.0409
  • Zahavi, T., & Lavie, D. (2013). Intra‐industry diversification and firm performance, Strategic Management Journal, 34, 978‐ 998. https://doi.org/10.1002/smj.2057

References

  • Alimov, A. (2014). Product market competition and the value of corporate cash: Evidence from trade liberalization. Journal of Corporate Finance, 25, 122‐139. https://doi.org/10.1016/j.jcorpfin.2013.11.011
  • Amihud, Y., & Lev, B. (1981).Risk reduction as a managerial motive for conglomerate mergers. The Bell Journal of Economics,12(2), 605‐617. https://doi.org/10.2307/3003575
  • Berger, P., & Ofek, E. (1995). Diversification's effect on firm value. Journal of Financial Economics, 37, 39–65. https://doi.org/10.1016/0304‐405X(94)00798‐6
  • Doukas, J. A., & Kan, O. B. (2006). Does global diversification destroy firm value? Journal of International Business Studies, 37 (3) .352‐371. https://www.jstor.org/stable/3875264
  • Dittmar, A., & Mahrt‐Smith, J. (2007). Corporate governance and the value of cash holdings. Journal of Financial Economics, 83, 599–634. https://doi.org/10.1016/j.jfineco.2005.12.006
  • Denis, D. J., Denis, D. K., & Sarin, A. (1997). Agency problems, equity ownership, and corporate diversification. The Journal of Finance, 52, 135–160. https://doi.org/10.1111/j.1540‐6261.1997.tb03811.x
  • Espinosa, C., Maquieira, C., Jara, M., & Vieito. (2018). Does corporate diversification create value in emerging markets? New evidence from Chile. Canadian Journal of Administrative Sciences, 35, 123‐135. https://doi.org/10.1002/cjas.1393
  • Faulkender, M., & Wang, R. (2006). Corporate financial policy and the value of cash, The Journal of Finance, 61, 1957–1990.
  • Glaser, A., & Müller, S. (2010). Is the diversification discount caused by the book value bias of debt? Journal of Banking and Finance, 34, 2307‐2317. https://doi.org/10.1016/j.jbankfin.2010.02.017
  • Hund, J., Monk, D., & Tice, S., (2010). Uncertainty about average profitability and the diversification discount. Journal of Financial Economics, 96, 463‐484. https://doi.org/10.1016/j.jfineco.2010.02.006
  • Hayat, R., & Hassan, M. K. (2017). Does an Islamic label indicate good corporate governance? Journal of Corporate Finance, 43, 159–174. https://doi.org/10.1016/j.jcorpfin.2016.12.012
  • Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance and takeovers. American Economic Review, 76, 323–339. https://ssrn.com/abstract=99580
  • Kuan, T. H., Li, C. S., & Chu, S. H. (2011). Cash holdings and CG in family‐oriented‐ controlled firms. Journal of Business Research, 64, 757‐764
  • Lang, L., & Stulz, R. (1994).Tobin's q, corporate diversification, and firm performance. The Journal of Political Economy, 102, 1248– 1280. https://www.jstor.org/stable/2138786
  • Lins, K. V., & Servaes, H. (2002).Is Corporate Diversification Beneficial in Emerging Markets? Financial Management, 31(1), 5‐ 31
  • Lins, K., & Servaes, H. (1999). International evidence on the value of corporate diversification. The Journal of Finance, 54 (6), 2215‐2239. https://www.jstor.org/stable/797992
  • 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, 13 (3), 366‐380. https://doi.org/10.1016/j.ememar.2012.06. 001
  • Rajan, R., Servaes, H., & Zingales, L. (2000). The cost of diversity: the diversification discount and inefficient investment. The Journal of Finance, 55, 35–80. https://www.jstor.org/stable/222550
  • Shah, I. A., & Shah, S. Z. A. (2018). Effect of corporate governance on Cash Holding: The Role of Product Market Competition. Nice research journal, 11, 39‐57. https://doi.org/10.51239/nrjss.v0i0.4
  • Shah, I. A., Shah, S. Z. A., Nouman, M., Khan, F. U., Badulescu, D., & Cismas, L. M. (2021). Corporate governance and cash holding: New insight from concentrated and competitive industries. Sustainability 13(9), 4816. https://doi.org/10.3390/su13094816
  • Ullah, S., Haroon, M., Hussain, S., & Rehman, U. A. (2022). Islamic labelling and corporate governance: a perspective of Shariah compliance firms. Journal of Islamic accounting and business, 14(5). https://doi.org/10.1108/JIABR‐03‐2021‐0108
  • Ullah, N., Abdul, W., & Nida, A. (2022). The nexus between Islamic label and firm value: evidence from cross country data. The journal of Asian finance, economics and business, 9(4), 409‐417. https://doi.org/10.13106/jafeb.2022.vol9.no4.0409
  • Zahavi, T., & Lavie, D. (2013). Intra‐industry diversification and firm performance, Strategic Management Journal, 34, 978‐ 998. https://doi.org/10.1002/smj.2057

Cite this article

APA

CHICAGO

    CHICAGO : Shah, Idrees Ali, Saleem Ullah Khan, and Muhammad Fahad Siddiqi. 2023. "Effect of Corporate Diversification on the Value of Cash Holding." Global Economics Review, VIII (IV): 51-60 doi: 10.31703/ger.2023(VIII-IV).05

HARVARD

    HARVARD : SHAH, I. A., KHAN, S. U. & SIDDIQI, M. F. 2023. Effect of Corporate Diversification on the Value of Cash Holding. Global Economics Review, VIII, 51-60.

MHRA

    MHRA : Shah, Idrees Ali, Saleem Ullah Khan, and Muhammad Fahad Siddiqi. 2023. "Effect of Corporate Diversification on the Value of Cash Holding." Global Economics Review, VIII: 51-60

MLA

    MLA : Shah, Idrees Ali, Saleem Ullah Khan, and Muhammad Fahad Siddiqi. "Effect of Corporate Diversification on the Value of Cash Holding." Global Economics Review, VIII.IV (2023): 51-60 Print.

OXFORD

    OXFORD : Shah, Idrees Ali, Khan, Saleem Ullah, and Siddiqi, Muhammad Fahad (2023), "Effect of Corporate Diversification on the Value of Cash Holding", Global Economics Review, VIII (IV), 51-60

TURABIAN

    TURABIAN : Shah, Idrees Ali, Saleem Ullah Khan, and Muhammad Fahad Siddiqi. "Effect of Corporate Diversification on the Value of Cash Holding." Global Economics Review VIII, no. IV (2023): 51-60. https://doi.org/10.31703/ger.2023(VIII-IV).05