Numerous existing studies have explored the impact of corporate diversification on firm performance, whereas considerably less research has investigated the inter-relationships among managerial ownership, diversification, and firm performance. This paper develops several hypotheses based on the agency theory self-interest perspective and tests the relationships among managerial ownership, corporate diversification, and firm perfor- mance using a sample of 98 emerging market firms listed on the Taiwan Stock Exchange. The results show a U-shaped relationship between managerial ownership and corporate diversification, similar to that found in prior studies. However, the inflection point is 33.17%, which is lower than that found in previous studies. Moreover, in contrast to prior results, corporate diversification is found to be positively associated with short-term firm performance and bears no relationship with mid-term firm performance, while firms engaged in unrelated diversification outperform those engaged in related diversification. This paper concludes with theoretical implications and suggestions for future research
CITATION STYLE
Chiung- Jung, C., & Chwo- Ming, J. Y. (2011). Managerial ownership, diversification, and firm performance: Evidence from an emerging market. International Business Review, (21), 518–534. Retrieved from http://ac.els-cdn.com/S0969593111001181/1-s2.0-S0969593111001181-main.pdf?_tid=82f5dee8-3268-11e7-961c-00000aab0f02&acdnat=1494081191_6b5ae04e2269f7d69e3fac1739b33ea1
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