Does governance affect corporate diversification behaviour in emerging markets?

ABSTRACT

This paper investigates the role of firm-level and country-level governance on corporate diversification behaviour in emerging markets. The results show that firms with combined leadership structure are more diversified while firms with more independent directors are less diversified. There is a U-shaped relationship between ownership concentration and diversification. No significant association between country-level shareholder protection and diversification is demonstrated.

KEYWORDS:

• Governance
• diversification
• agency theory
• emerging markets

JEL CLASSIFICATION:

• G30

Disclosure statement

No potential conflict of interest was reported by the authors.