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Ownership Identity and Mitigation of Diversification Discount: Evidence from Malaysia

Author

Listed:
  • Kian-Tek Lee

    (Business School, Sunway University)

  • Chee-Wooi Hooy

    (School of Management, Universiti Sains Malaysia)

Abstract

This paper examines the mitigation effect of the ultimate ownership identity on the diversification discount under the emerging market’s institutional setting. Using a sample of non-financial listed firms in Malaysia from 2002 to 2013, the study reveals that government ultimate ownership is able to mitigate the diversification discount better than family ultimate ownership by 5 to 43 percent, whereas family ultimate ownership is better than foreign ultimate ownership in mitigating the diversification discount by 30 to 118 percent. Our study also finds that a high degree of ownership concentration gives rise to the diversification discount.

Suggested Citation

  • Kian-Tek Lee & Chee-Wooi Hooy, 2018. "Ownership Identity and Mitigation of Diversification Discount: Evidence from Malaysia," Malaysian Journal of Economic Studies, Faculty of Business and Economics, University of Malaya & Malaysian Economic Association, vol. 55(1), pages 97-113, June.
    • Handle: RePEc:mjr:journl:v:55:y:2018:i:1:p:97-113
    DOI: 10.22452/MJES.vol55no1.6
    as

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    More about this item

    Keywords

    Diversification; firm value; GMM; ownership identity;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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