Business diversification has drawn attention of strategic management and finance scholars. This study examines relationship between diversification effect on performance using multiple measures of performance namely accounting and market measurements. The study used panel data analysis for a sample of 70 Malaysian firms from various industries during the period 2001 to 2005. The evidence produces some interesting findings with regard to risk factors and effect on firm’s performance while other factors are consistent with previous findings. In particular, firms that adopt the focused strategy perform better than those with diversified strategy. Different measures of performance used in the study produced varying results after controlling for risk, firm size and economic condition, using the inflation rate as a proxy...

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Diversification strategy has been researched extensively in the fields of strategic management and finance. Nevertheless, there is still inadequate empirical research related to the role of diversification strategy on selection of financing choice. Moreover, there is inconclusive evidence among literature in this particular field. This study examines the effect of diversification on choice of financing among Malaysian public listed firms using Pearson Correlation for a sample of 76 firms during the period of 1994-2007. The evidence suggests that diversification strategy positively influences choice of financing. This possibly indicates that implementation of diversification strategy has an impact on how firms select its financing decision. Nevertheless, this evidence should be further examined using robust methodology to substantiate this outcome...

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