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Academic Journal of Business & Management, 2023, 5(5); doi: 10.25236/AJBM.2023.050516.

The value of Diversification—An empirical study based on 220 companies


Siyu Pan

Corresponding Author:
Siyu Pan

Guangxi Minzu University, Nanning, Guangxi, 530006, China


In this study the value of diversification has been assessed by constructing the excess value of firms using the multiplier method. Through regression, it was found that there was 15.7% to 34.9% average loss from diversification during 2011-2015. The smaller the firm size, the more value would lose from diversification. It was found that cross-subsidization contributed to the firm’s value loss from diversification; meanwhile, coinsurance effect would not influence positively on firm value by removing the financial constraints as expected.


Diversification, Firm value, Cross-subsidization, Coinsurance

Cite This Paper

Siyu Pan. The value of Diversification—An empirical study based on 220 companies. Academic Journal of Business & Management (2023) Vol. 5, Issue 5: 113-120. https://doi.org/10.25236/AJBM.2023.050516.


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