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Ahma and Human laysia, Skud m-melati@ tan Norhan A and Human laysia, Skud m-norhan@ June 28, 201 tp://dx.doi.o on financia lars found p me theories In this pa tudies. rnational div Asian Financi terature onding Auth n Resource dai, Johor B live.utm.my ad Anuar n Resource dai, Johor B @utm.my Adb Hamid n Resource dai, Johor B @utm.my 12 Publ org/10.5296 al performa positive or and motiva aper, we tr versification n Journal of F ial Perf e hor) Developme ahro, Malay y Developme ahro, Malay d Developme ahro, Malay lished: Dece /ajfa.v4i2.1 nce has bee negative re ation which ry to show n, Financial Finance & Ac ISSN 19 2012, Vol. www.macrothi formanc ent ysia ent ysia ent ysia ember 1, 20 1786 en subject elationship b h explain the w measurem l performan ccounting 946-052X 4, No. 2 ink.org/ajfa ce: A 012 of some between e part of ment of nce Introdu The cor finance paper d research Definit There a from th activitie industri Kaka, 2 of their scholars industry line of b Moreov product means a a firm a Corpor Ansoff unrelate three di mode (D Diversi It intro measure Entropy determi SIC cod way for for usin cannot problem concent Herfind as noted uction rporate dive in last thr discusses th h. ions are many de he diverse, es (R. Pitts ies, it is call 2007; Santa r business sc s defined d y (Jacquemi businesse (C ver, accordi t diversifica a firm produ acts in abroa rate Divers (1957) de ed) and inte imensions, Datta, Rajag ification de oduced thro ement whic y index. In ining corpor des are a sy r counting d ng the SIC explain wh m, it is su tration coun dahl Index i d in Equati ersification ree decades his issues b efinitions of which mea & Hopkin led the dive alo & Becerr copes excep iversificatio in & Berry, C. Montgom ing to Anso ation and in uces more t ad markets sification D efined corp ernational d which are gopalan, & egree ough three ch are: Stand addition, th rate diversif stem for ide diversificati codes. The hich industr uggested to nting (Berry is defined a ion 2.1: and financi (Y. S. Kim base on th f corporate d ans distinct ns, 1982). W ersified firm ra, 2008). F pt their curr on as firm e 1979), or n mery, 1994) off (1957), nternational than one kin (M. A. Hitt, imensions porate diver diversificatio diversificat Rasheed, 1 main meth dard Indust here is no a fication (Sh entifying a b ion and Ma ey expresse ry is more i o use Her y, 1971; McC as the total s 57 ial perform m & Mathu he definitio diversificati and differe When a firm m (Barney, 2 Furthermore rently busin enters new new segmen . corporate d (geographi nd of produ , Ireland, & rsification on. Also, pr tion degree 991). thods of co trial Classifi agreement o hackman, 20 business ac artin and Sa ed if a firm important t rfindahl ind Connell, Br square of th Asian ance has be ur, 2008; Sa ns, measur ion. Howev ent that sho m operates 2010; M. Hi e, diversific ness (Hilleb sector (Iaco nt (Denis, D diversificati ic) diversifi uct and inter & Hoskisson as product roduct dive e, diversific omputing b fication (SIC of which me 007). cording to i yrak (2003) m operates i than others dex, which rue, & Flynn he sales sha n Journal of F een subject antalo & B rement and ver, diversifi ows a discr in more tha itt & Ireland ation mean randt & Ca obucci & R Denis, & Sar on classifie cation. Prod rnational div , 2007). t diversific rsification c cation type based on t C) codes, He easurement its activity, w ) noted that n many ind for the firm h was intro n, 2009; Mc are of each p Finance & Ac ISSN 19 2012, Vol. www.macrothi of many st Becerra, 200 d results of fication wor repancy in t han one bus d, 1986; Ibr ns increased annon, 1990 Rosa, 2005), arin, 1999) o ed into two duct divers versification cation (rela can be divi and divers the busines erfindahl in t is the best which is the t there is a p dustries, SI m. For solv roduced for cVey, 1972) product of ccounting 946-052X 4, No. 2 ink.org/ajfa tudies in 08). The f related d comes the firm siness or rahim & d activity 0). Other , or new or a new groups, ification n means ated and ded into ification ss count ndex and t one for e easiest problem C codes ving this r firm’s ). the firm Equatio Where, of produ The hig index al The last spread diversif other in total sal and rela Palepu, In addit better t range o index is Equatio Where, segmen As it m related addition increasiln n. Diversi Wringle in four (1974) vertical and unr because could t Adition on 2.1: Her Pi is the sal uct units of gh Herfinda lso is know t measurem into other fication rese ndexes. The les/assets d ated diversi 1985). Park tion, Chatte than other d of using entr s measures a on 2.1: Tot Pi is the sh nts mentioned, t and unrela n, if total en ing levels o ification Ty ey (1970) d majors wh extended t l, dominant related bus e of the firm transfer cor nally, some rfindahl In les share of f the firm. W ahl index is wn as Herfin ment is Entro r subjects. earches. Th e elements divide acros ification in k and Jang erjee and B diversificati ropy index as Equation al Entropy hare sale of the main pr ated diversi ntropy is n of diversific ype defined dive hich are sin these four constrained siness. How m’s uncomp re skill to n scholars use dex H f product i in When this in , the more dahl-Hirsch opy Index w Jacquemin e index has are the num s industry p a firm (Am (2011) said Blocher (199 ion measur (C. J. Chen n 2.2: y Index E segment i in rivilege of fication in ear zero, it cation, and t ersification t ngle, domin parts into d, dominant wever, he s plete report new busine ed another 58 P ; 0 n the firm in ndex is near focus the f hmann index which was p n and Ber s three signi mber of ind parts, and th mit & Livn d the index i 92) reported rements. Th n & Yu, 201 P ln 1 n total sales entropy ind the firm (r means that the maximu type based nant, relate seven parts t linked-unr said someti ts. In addit esses; howe classificatio Asian 1 n terms of p zero, it me firm is (Ber x. proposed pr rry (1979) ificant elem dustry of fi he third is t nat, 1988; B is objective d the entrop herefore, the 11; Park & /P s of the firm dex is that refer to (Ja t firm is fo um and min on relatedn ed and unre s, which ar related, rela mes it is d ion, he stat ever, unrela on with mix n Journal of F percentage a ans that the rry, 1971; M imarily in p extended ments, which rm’s activit that power o Baysinger & , continues py index fo ese privileg Jang, 2011) m and n is th it can dete acquemin & cus and bec nimum of E ness within elated dive re single do ated constrai difficult to ted that rela ated diversi x Wringley Finance & Ac ISSN 19 2012, Vol. www.macrothi and n is the e firm is div McVey, 197 physics; how entropy in h are differe ties, the am of part of u & Hoskisson and decom or diversific ges cause t ). The total he number o ermine the & Berry, 19 comes grea Entropy is 0 the firm’s p ersification. dominant, d ained, relate count thes ated divers ification co and Rumelt ccounting 946-052X 4, No. 2 ink.org/ajfa number versified. 72). This wever, it ndex in ent from mount of unrelated n, 1989; posable. cation is he wide entropy of firm’s score of 979)). In ater with 0 E portfolio Rumelt dominant d linked se ratios ification ould not. t‘s ideas together Rao, 19 Diversi Scholar (NA Be Internal establis merger (N. Ber Interna Internat Hitt, et perform strategy As a m (1987) which internat exploit Internal (Ghosh Kogut, geograp Firms w markets firm in resourc In addi borders more ef addition compet also ach of thes internat relation 1989), (Siddha internat r which are 998). ification M rs define mo erg, 1973; L l developm shing a new and acquisi rg & Pitts, 1 ational Div tional diver t al., 2007) mance (Cap y. matter of fac argued tha gives firms tional diver the benefit lization of al, 1987; W 1993), an phic market with strong s (Bartlett & internation es, which is ition, multi s by standar fficiently an nal compet itive enviro hieve a grea e argumen tional diver nship (Dani other studi arthan & La tional divers e single, mo Mode ode of dive Lamont & A ment takes w business ( ition, it mu 979). ersification sification m ). This stra par & Kota ct, internatio at internati s the oppo rsification h ts of interna markets ha W. Kim, Hw nd sharing ts (Hamel, 1 competenci & Ghoshal, al markets s expected t inational fir rdizing prod nd effective titive advan onment) and ater bargain nts support sity and per els & Brac ies have sh all, 1982). M sification an oderately div ersification Anderson, advantage (Datta, et al st pay atten n means a firm ategy is a be, 2003). onal divers onal divers rtunity for has been d alization in as advantage wang, & Bu core comp 1991). ies that are 1999). Thu is, the high to lead to hi rms have t ducts, ration ely (Kobrin ntages by d cross-bord ning power the view rformance. A cker, 1989; hown either Most of thes nd performa 59 versified an as internal 1985; R. P of interio l., 1991). In ntion to the m acts in the growth str This effec ification of sification o greater gr developed o internation es such as urgers, 1989 petencies a developed us it is argu her will be t igher perfor the opportu nalizing pro n, 1991). Fu exploiting der transact with increa that a posi Although s Gomes & r a negativ se studies ha ance is linea Asian nd highly di developme itts, 1976; R or resource n contrast, i weaknesses e market wh rategy that t is stated ffers severa offers prosp rowth. The on the theo nal markets economies 9; W. C. Ki among diffe at home ca ued that the the exploita rmance (Hym unity to in oduction, an urthermore, market im tions (such ased size (S itive, linear ome studies Ramaswam ve relations ave assumed ar (Gomes & n Journal of F iversified (L nt and merg R. A. Pitts, es and cor if a firm lik s and streng hich is not in has a maj by Ansoff l advantage pective ma most acce oretical assu (Caves, 20 of scale, s im, Hwang erent busin an utilize th e higher the tion of tang mer, 1976). tegrate thei nd/or allocat , multinatio mperfections as transfer Sundaram & r relationsh s have demo my, 1999; G ship or no d that the re & Ramaswa Finance & Ac ISSN 19 2012, Vol. www.macrothi Li, 2004; Pa rger and acq , 1977; Yip re compete kes to diver gths of a tar n its country ajor effect f (1965) as es to firms. arket oppor epted argum umption th 007; Hymer scope, and , & Burger ness segme hese in inter e involvem gible and in . ir activities ating their re onal firms c s (such as pricing), & Black, 19 hip exists b onstrated a Grant, 1987 relationshi elationship b amy, 1999). ccounting 946-052X 4, No. 2 ink.org/ajfa andya & quisition p, 1982). ency for rsify via rget firm y (M. A. on firm growth Buhner rtunities, ment for at firms r, 1976). learning rs, 1993; ents and rnational ment of a ntangible s across esources can gain s a less and can 992). All between positive 7; Haar, ip at all between . Howeve and per Ramasw 2002; T between point, a Table 1 Autho Gering Fatem Koher Verno Geyik Contra Miller Morck Kim a Errunz The oth comput Howeve internat Kotabe, 1994b; The Th The ma efficien Agency (princip is drive compen portfoli corpora might b risk and diversif Free Ca er, some of rformance, a wamy, 1999 Tallman & n multinatio and then lev . Internation ors ger et al (2000 mi (1984) rs (1975) on (1971) kadgi and Gey actor et al. (20 r and Pras (19 k and Yeung ( and Lyn (1987 za and Senbet her signific ting interna er, most o tional diver , 2003; Ger Tallman & heory of Wh ain theories ncy theory, r y Theory: pal) and ma en by manag nsation (Ah ios at low c ate diversifi be forced to d return pro fication and ash Flow T f research h and has argu 9; M. A. H Li, 1996). onality and vels off. nal Diversif 0) yikadgi (1989) 003) 80) (1991) 7) t (1984) cant subject ational dive of related rsification ringer, et al Li, 1996). hy Firm Di s about why resource bas Jensen an anager (agen gers' interes hmad, Ishak cost to bala ication strat o accept the ofiles. Henc d firm value Theory: the has examine ued for a th Hitt, Hoskis These stu firm perfor fication Me Method foreign sa foreign as number o employee foreign ea ) foreign bu number o offices number o subsidiari number o foreign di absolute f t is that the ersification researches (Bobillo, L l., 2000; Gr iversify y firm dive sed theory a d Meckling nt) of the fi sts such as e k, & Mana ance their i tegies. Due e firms’ div e, agency th . theory is ex 60 ed a nonlin heoretical ra son, & Kim udies have rmance, wh asures ales/total sales ssets/total asse of foreign emp es arnings/total e usiness/total b of foreign o of nations in ies of subsidiaries irect investme foreign sales e measurem there are s have used López-Iturri Grant, 1987; ersify, are a and market g (1976) d irm. In addi employmen af, 2003). W investment e to the na versification heory woul xplained by Asian near relation ationale to ju m, 1997; K found an i here perform s ets ployees/total n earnings business offices/total n which firm h abroad ent ment of inte several met d foreign s iaga, & Te Habib & V as agency t power theo define that ition, the th nt risk-reduc Whilst, sha risk and th ture of cor n strategy a ld predict a y Jensen (19 n Journal of F nship betwe ustify their Kotabe, Srin inverse U-s mance increa S F F number of F F F number of F has foreign N N F A ernational d thods as di sales/total ejerina-Gaite Victor, 199 theory, free ry. the confli heory states ction, power areholders c herefore the rporate stru lthough it m negative re 986) that an Finance & Ac ISSN 19 2012, Vol. www.macrothi een multinat position (G nivasan, & shaped rela ases up to a Symbol FSTS FATA FETN FETE FBTB FOTO NNS NFS FDI AFS diversificati iscussed in sales for m e, 2010; C 1; Sullivan e cash flow ict between that divers r, prestige a can diversi ey might n ucture, share might not s elationship b nticipate wh ccounting 946-052X 4, No. 2 ink.org/ajfa tionality Gomes & Aulakh, ationship a certain ion. For Table . measure Capar & , 1994a, w theory, n owner ification and high ify their ot favor eholders suit their between hich type of div profitab manage low-ben Efficien are exp synergy Resour firm ha some un be more resourc Market Montgo many p diversif can stab hypothe diversif Previou In this discusse of summ Studies The div this are profit t compet Caper a firm pe industri and per Jung an internat In addi more fin Bramm diversif versification ble investm ers with un nefit or even ncy Theory ected to ma y (unrelated rce based T s remarkabl nused capac e profitable es of firm h t Power Th omery, 1994 products so fies related bilize the p esized that fied firm (C us Studies section, so ed based on mary is pres s on Develo versification ea was Rum than unrela encies. and Kotabe erformance ies. They fo rformance in nd Chan-O tional diver tion, they c nancial perf mer et al. (2 fication on n create or ment opport nused borro n value-des y: the effici ake some sy d diversifica Theory: Pen le resources cities by app e where app has differenc heory: this 4). Because its market diversificat position and diversificat Caves, 1981; ome signific n their varia sented. oped Count n and perfor melt. Rume ated divers (2003) exam in service f ound out tha n German s Olmsted (20 rsification a concluded t formance. 006) invest a sample o destroy va tunities or owing powe troying mer ency theory ynergies (M tion) and op nrose (1959) s that are kn plying dive lying the un ces in speci theory stem e, diversified power inc tion, it incre d use predat tion increas ; R. A. Mille cant researc ables and fin tries rmance stud lt (1974; 1 sification, b mined the r firms in sam at there wa ervice firms 005) found and financia the more re tigated betw of large UK 61 alue. Manag paying out er and larg rgers. y suggests t Mat Nor, 200 perational s ) developed nown as its ersification s nused resou ificity (C. A mmed from d firms act creases (Edw eases the m tory pricing es market p er, 1973). ches from ndings. In a dy has start 982) noted because fir relationship mple of 81 as a curvilin s. d a positive al performan elated prod ween corpor K firms. Th Asian gers can sp t to shareh ge FCF are that diversif 03). These s ynergy (rela d resource b competitiv strategy. Th urces (C. M A. Montgom m a fear of m in many ge wards, 195 market powe g to improv power; then developed addition, at t ed from US d that relate rms in rela between in major Ger near relation e relation nce among duct and int rate social p hey found n Journal of F pend free c holders. So, more prob fication occ synergies ar ated diversi ased theory ve advantage his view imp ontgomery, ery & Wern market bein eographic m 5). Furtherm er. By havin e its profita n, more pro and develo the end of th SA. One of ed diversific ated form nternational man service nship betwe between re media firm ternational performanc out eviden Finance & Ac ISSN 19 2012, Vol. www.macrothi cash flow (F , the theor bable to un curs once m re such as f ification). y which stat es and firm plies that a f , 1994) whe nerfelt, 1988 ng monopol market and more, when ng market p ability. Res ofit can gain oping count the each par the first au cation mak can transf diversifica e firms acr een multinat elated prod ms in United diversificat ce and geog nce of a sig ccounting 946-052X 4, No. 2 ink.org/ajfa FCF) in ry states ndertake managers financial es every can use firm can ere these 8). lized (C. produce n a firm power, it earchers n for the tries are rt a table thors on kes more fer core ation and oss four tionality duct and d States. tion, the graphical gnificant positive regions diversif social p Qian et regiona leverag regiona diversif impact maximi regions Bobillo perform the Uni externa and firm Kahlou risk in Herfind there is linear re Some s utilized financia diversif diversif profitab diversif of relate Some o 1993-20 depende variable control profitab associat e relationsh of the wo fication and performance t al. (2008 al (internatio e, risk, R& al diversific fication enh becomes ize their pe and a strict o et al. (201 mance. Base ited Kingdo l competiti m performan l and Hallar 69 French dal Index as s no relatio elation betw scholars did d Entropy in al perform fication dec fication inc bility that a fication dec ed diversific others rely 006 (Muño ent variable e with respe variables. bility. There ted with hig hip between orld. Howe d social per e. 8) examined onal) divers &D intensity cation has l hances firm negative. T erformance tly limited n 0) examine ed on a samp om, Spain, ve advanta nce. ra (2010) st large firm well as RO onship betw ween total ri d a research ndex as corp mance indic clines prof creases pro at a certain reases it. In cation. y on small oz-Bullón & es and corp ect to Size, They repor efore, the ad gher perform n the two f ever, they rformance d d on larges sification a y, product s linear and m performan The results when they number of d ed the assoc ple of manu and Denma ages affecte tudied the re ms between OA, Tobin’s ween divers isk and dive h in 308 res porate diver cators. The fitability. O ofitability. level, relat n addition, th and medi & Sanchez orate divers leverage, li rted a negat doption of mance. 62 for some ty shown that differs sign st US firms affects firm cope, and i curvilinear nce linearly s also show y operate a developing r ciation betw ufacturing fi ark, the res ed the relati elationship 1995 and Q, risk, deb ification an ersification. staurant firm rsification a ey discove On the oth They conc ted diversif they found t ium Spanis z-Bueno, 2 sification (p iquidity, R& tive relation both produ Asian ypes of soc t the relati nificantly ac s during th performanc industry eff r effects on y up to a c wed that f across a mo regions. ween interna firms in five ults showed ion betwee between div 2005. They bt and grow nd performa ms from US and ROA, R ered that her hand, a cluded on fication incr these firms sh manufac 011). They product and &D and mar nship betwe uct and inter n Journal of F cial perform onship betw cross differ he years 19 ce. They co fect. The re n firm perfo certain thres firms of de oderate num ational diver e countries a d that the m n internatio versification y utilized E wth. As a res ance. In ad SA (Park & ROS and risk at a cert at a certai the volatil reases volat did not prof cturing firm y utilize R d internation rket demand een geograp rnational di Finance & Ac ISSN 19 2012, Vol. www.macrothi mance and ween geog rent compon 996-2000 th ontrolled si esults indica formance. R shold, and eveloped c mber of de rsification a as Germany mix of inter onal divers n, performa Entropy In sult, they fo ddition, ther & Jang, 2011 k of profita tain level, in level, u lity of acc tility and u fit from a lo ms over th ROA and R nal) as inde d-industry e phic expans iversificatio ccounting 946-052X 4, No. 2 ink.org/ajfa in some graphical nents of hat how ize, age, ated that Regional then its countries eveloped and firm y, France, rnal and ification ance and dex and ound that re is no 1). They ability as related unrelated counting unrelated ow level he years ROS as ependent effect as sion and on is not Table 2 . Summary of Studies DDone on De 63 eveloped Co Asian ountries n Journal of FFinance & Ac ISSN 19 2012, Vol. www.macrothi ccounting 946-052X 4, No. 2 ink.org/ajfa Studies Lins an markets Thailan they co has a te support imperfe Ahmad investig corpora Herfind negativ relation general reduce c Clasess Japan a Singapo of verti short- a combin experien explorin long-ter Some s perform They di and val Entropy control perform Some r value in examin Malays results differen diversif Chakrab s on Develo nd Servaes s such as nd in 1995. oncluded the en to thirty t internal ections. et al. (20 gated the ate diversifi dahl index ely related nship betwe ly as expec corporate d sens et al. ( and seven ore, Taiwan ical relatedn and long-te nation. The nce poor p ng complem rm perform cholars asce mance with ivided finan lue-based ( y index and variables. mance while researchers ncreases w ed on owne ia. They sh of the rese ntly from fication redu barti et al. ( oping Coun (2002) do Hong Kon They found ere is a disc percent ma capital ma 003) started relationship ication in B and numbe with divers en manager cted. Theref diversificatio (2003) have east Asian n and Thaila ness and c erm produc ey found o performanc mentary div ance. ertained the new classif ncial perfor (Tobin’s Q) d considerin They foun e product div found out n hen the lev ership struct howed more earch provid focused fir uces the val (2007) exam ntries ne their stu g, India, I d diversifie count for in anagement o arket effici d a researc p between Bursa Mala er of segm sification. I rial owners fore, they c on activities e done a re n countries and during omplement ctivity effec out, except e both in versification e relationshi fication of f rmance as a ). In additi ng firm size nd out inter versification not only di vel of diver tures and co e than half o ded no evid rms. The f lue of firms mined the e 64 udies in on Indonesia, M d firms less ndustrial gro ownership iency in e ch on corp corporate aysia. They ment and fo In addition, ship and div concluded g s. esearch on c as Hong K the years 1 tarily in Ea cts associat t for Japan the short- n are gener ip between financial pe accounting-b ion, they co e, age, lever rnational d n is negativ iversificatio rsification orporate div of the firms dence that finding wa . effect of cor Asian ne thousand Malaysia, S s profitable oup firms a concentratio economies porate diver governanc y computed ound non-in they found versification good corpor corporate d Kong, Indo 991 to 1996 ast Asia cou ted with th nese firms and the lo rally associ internation erformance based (ROA omputed in rage, risk, i diversificatio vely correlat on do not re increases (I versification s analyzed w diversified as inconsist rporate dive n Journal of F d firms fro Singapore, than focus nd for dive on. Finally, with seve rsification i ce, owners d corporate nstitutional d out there n although t rate governa diversificatio onesia, Mal 6. They exa untries. The he different , vertically ong-term. B iated with p al diversific (Tongli, Pin A), market- nternational industry me on is positi ted. educe the fi Ishak & N n on 355 Pu were diversi firms in M tent with t ersification o Finance & Ac ISSN 19 2012, Vol. www.macrothi om some e South Kor s firms. In a ersified firm , the results ere capital in Malaysi ship structu e diversifica blockholdi is not a sig the directio ance was sh on in South laysia, Phil amined the ey investig types of b y integrate By contras positive sh cation and f ng, & Chiu -based (shar l diversifica embership, tively corre firm value, Napier, 2006 ublic Listed ified. Howe Malaysia are the argume on perform ccounting 946-052X 4, No. 2 ink.org/ajfa merging rea, and addition, ms which s did not market a. They ure and ation by ing was gnificant ons were hown to h Korea, lippines, patterns ated the business d firms st, firms ort- and financial u, 2005). re price) ation by GNP as elated to but also 6). They firms in ever, the e valued ent that mance for some fi countrie on perf environ environ strikes. instituti Other r years 2 number variable achieve firms at Chen an relation using a U-shape Moreov and bea diversif irms acting es between formance in nments there nments, div As a result ional enviro researchers 2001 to 200 r of segmen es were risk e high perfo t low risk us nd Yu (201 nships amon a sample o ed relation ver, corpora ars no relati fication outp in stable p 1988 and 2 n more deve e is an impr versification t, they foun onments, eco examined 05 (Daud, S nts, the depe k, size, infla ormance and sually get h 1) develope ng manager of 98 firms nship betw ate diversific ionship with perform tho eriod and e 2003. They eloped insti roving perfo n proposes nd out that onomic stab diversificat Salamudin, endent varia ation and lev d financial r high returns. ed several h rial ownersh listed on ween mana cation is po h mid-term ose engaged 65 economy sh y concluded itutional en ormance. Ev limited ad the conseq bility and af tion and pe & Ahmad ables were R verage. The ratio is affec . hypotheses hip, corpora the Taiwan agerial ow ositively ass firm perfor d in related d Asian hock. They d d that divers nvironments ven though dvantages o uent of div ffiliation in erformance , 2009). Th ROA and m ey showed f cted by risk based on th ate diversif n Stock Ex wnership an sociated wit rmance, wh diversificati n Journal of F did their res sification ha ; although, in least dev once an eco ersification business gr of 70 Mal heir indepen market meas firms with fo k and size of he agency t fication, and xchange. T nd corpora h short-term hile firms en ion. Finance & Ac ISSN 19 2012, Vol. www.macrothi search in si as a negativ in least de veloped inst onomy-wid n is influenc roups. laysian firm ndent varia sure and the focused strat f firms. In a theory and t d firm perfo The results ate diversi m firm perfo ngaged in u ccounting 946-052X 4, No. 2 ink.org/ajfa ix Asian ve effect eveloped itutional e shock ced with ms from able was e control tegy can addition, tests the ormance show a fication. ormance unrelated Table 3 . Summary of Studies DDone on De 66 eveloping C Asian Countries n Journal of FFinance & Ac ISSN 19 2012, Vol. www.macrothi ccounting 946-052X 4, No. 2 ink.org/ajfa Summa As can relation state fo some s financia Richard show th 2011; S associat Claesse Montgo relation two ma (Palich, Same a perform 1989; G Black, 1 2011; S between 2008). 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