The Effect of Diversification Strategy and Implementation of Good Corporate Governance on Firm Value
DOI:
https://doi.org/10.38035/jafm.v2i2.58Keywords:
Diversification Strategy, Good Corporate Governance, Firm Value, Resource Based TheoryAbstract
This study aims to determine the effect of diversification strategy, good corporate governance implementation on firm value. The study consisted of 41 companies were classified as companies withthe most trusted companies category in Indonesia in 2015 by SWA magazine. The analysis technique used is multiple regression analysis and testing using SPSS for Windows version 22 and also test the classical assumption of normality test, autocorrelation test, multicollinearity test and heteroskedastisitas test. The results of this study show that (1) better implementation of the diversification strategy did not result in a significant increase to the company’s firm value, (2) better implementation of good corporate governance, will increase the company’s firm value.
References
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Haming, Mahfud Nurnajamuddin. 2011. Modern Production Management, Book 1, 2nd Edition, Jakarta: PT. Bumi Aksara,
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Kaplan, Steven N. and Michael Weisbach,. 1992. The Success of Acquisitions: Evidence from Divestitures. The Journal of Finance Vol. XLVII, No. 1. Wiley Online Library.
Kuppuswamy, Venkat. and Villanova Belen. 2010. Does Diversification Create Value in The Presence of External Financing Constrains ? Evidence from The 2007-2009 Financial Crisis. Working Paper. Harvard Business School. 10-101
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Li, David D. and Shan Li. 1996. A Theory of Corporate Scope and Financial Structure. The Journal of Finance. Vol. 51 Issue 2. 691-709. Wiley Online Library
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Ratno Purnomo. 2011. Resource-Based View and Sustainable Competitive Advantage: A Critical Review of Jay Barney's Thoughts. Purwokerto, Journal of Management and Business Vol.2 2011. Jendral Sudirman University.
R.S.H.J.Nijman, S.E Van Der Wolk, 1997. Modern Marketing Strategy, Jakarta: Erlangga,
Sekaran, Uma. 2009, Research Methods for Business, 5th Edition, Willey, New York
Shin, Hyu-Han. and Stulz, Rene M. 1998. Are Internal Capital Market Efficient .The Quarterly Journal of Economic. Oxford Journal. 113 (2) : 531-552.
Siallagan, Hamonangan dan Mas. Ud. Machfoedz. 2006. Corporate Governance Mechanism, Profit Quality and Company Value. Article National Accounting Symposium (SNA) IX, Padang.
Smith, Clifford W. and Ross L. Watts. 1992. The Investment Opportunity Set and Corporate Financing, Dividend, and Compensation Policies. Journal of Financial Economics. North Holland. 263.292.
Stein, Jeremy C. 1997. Internal Capital Market and The Competition for Corporate Resources. The Journal of Finance. Vol. LII. No. 1
Sukmawati Sukamulja. 2004. Good Corporate Governance in the Financial Sector: The Impact of Good Corporate Governance on Financial Performance. Vol.8. No.1. June 2004.
SWA Magazine. 2014. The Struggle to Become a Trusted Company. Issue 27. Jakarta
Tendi Haruman. 2011. The Effect of Ownership Structure on Financial Decisions and Firm Value
Tobin, James. 1969. A General Equilibrium Approach to Monetary Theory. Journal of Money, Credit, and Banking. Ohio State University Press. Vol. 1, No.1. pp. 15-29. DOI: 10.2307/1991374
The Indonesian Institute of Corporate Governance, Official site. www.iicg.org
Tjiptono, Fandy. 2010. Marketing Strategy, 3rd Edition, Yogyakarta: ANDI Publisher
Wernerfelt, Birger. 1995. “A Resource-Based View of the Firm”, Strategic Manajement Journal, 5: 171-180.
Wiliamson, Oliver E. 1981. The Economic of Organization : The Transaction Cost Approach. American Journal of Sociology. The University of Chicago Press. Vol. 87, issue 3. 548-577
Yeni Absah, 2007, The Effect of Organizational Learning Ability on Diversification Level Competencies and Performance of Private Universities in North Sumatra, Journal of Economics and Business. Airlangga University, Surabaya.
Corporate Governance Vol.7 No.2, 2007.
Ahmad Kurnia, 2009, Know Agency Theory. Online articles. Available: www.elqorni.com/2009/02/26/menkenal-theory-agency
Barney, J.B. 1991, Firm Resource and Sustained Competitive Advantage, Journal of Management, vol 17. No.1. 99-120. Texas A&M University
Barney, J.B. and Arikan, A. M. , 2002. The Resource–based view: origin and implication. The Blackwell handbook of strategic management. 716.
Berger. P.G. and Ofek E. 1995. Diversification’s Effect on Firm Value. Journal of Financial Economics. vol 37.
Bettis, Richard A. and Vijay Mahajan. 1985. Risk/Return Performance of Diversified Firms. Management Sciene Paper. Dallas, Texas. Southern Methodist University
Billet, Mathew T. and David C. Maurer. 1998. Diversification and the value of Internal Capital Market: The Case of Trading Stock, Working Paper Southern Methodist University, Dallas.
Black, Bernard. Hasung Jang and Woochan Kim. 2006. Predicting Firms’ Corporate Governance Choice: Evidence From Korea. Journal of Corporate Finance. ScienceDirect. Vol. 12, issue 3. 660-691.
Brigham, Eugene F. and I.C. Gapenski. 2003. Intermediate Financial Managememt. Eighth Edition. New York: The Dryden Press.
Chatterjee, S. and B.Wernerfelt. 1991. The Link Between Resources and Type of Diversification: Theory and Evidence, Strategic Management Journal Vol 12.
Darmawati, Deni.; Khomsiyah and Rika Title Rahayu. 2005. “Corporate Relationship and Company Performance”, Indonesian Journal of Accounting Research, Vol. 8, No. 1, January.
Ficici, Aysun. C. Bulent Aybar. 2012. Corporate Governance and firm Value in Emerging Markets an Empirical Analysis of ADR Issuing Emerging Market Firms. Emerging Market Journal. Vol. 2-2012. ISSN 2158-8708
Haming, Mahfud Nurnajamuddin. 2011. Modern Production Management, Book 1, 2nd Edition, Jakarta: PT. Bumi Aksara,
Jose, M.L., Nichols, L.M., & Stevens, J.L. (1986). Contribution of diversification, promotion, and R&D to the value of multiproduct firms: A Tobin’s q approach. Financial Management, 15 (4), 33-42.
Kaplan, Steven N. and Michael Weisbach,. 1992. The Success of Acquisitions: Evidence from Divestitures. The Journal of Finance Vol. XLVII, No. 1. Wiley Online Library.
Kuppuswamy, Venkat. and Villanova Belen. 2010. Does Diversification Create Value in The Presence of External Financing Constrains ? Evidence from The 2007-2009 Financial Crisis. Working Paper. Harvard Business School. 10-101
Lang, L.H.P, and Stulz, R.M. 1994. “Tobin’s q Corporate Diversivication, and Firm Performance”. Journal of Political Economy.
Li, David D. and Shan Li. 1996. A Theory of Corporate Scope and Financial Structure. The Journal of Finance. Vol. 51 Issue 2. 691-709. Wiley Online Library
Li, Mingfang and Yim-Yu Wong. 2003. Diversification and Economic Performance: An Empirical Assestment of Chinese Firms. Asian Pacific Journal of Management, 20, 243-265.
Malkiel, Burton G. George M. Von Furstenberg and Harry S. Watson. 1979. Expectations, Tobin’s q, and Industry Investment. The Journal of Finance. Online Library Wiley. Vol. XXXIV, No.2. DOI: 10.1111/j.1540-6261. 1979.tb02121.x
McConnel, John J. and Henri Servaes. 1990. Additional Evidence on Equity Ownership and Corporate Value. Journal of Financial Economic 27. North Holland. 595-612
Memili, E. Chrisman, JJ. Chang, EPC. and Kellermanns. 2011. The determinants of family firms’ subcontracting: a transaction cost perspective. Journal of Family Business Strategy. Vol. 2, No.1. pp. 26-23. DOI: 10.1016./j.jfbs.2011.01.003.
Morck, Randall K. David Strangeland. and Bernard Yeung. 1998. Inherited wealth, Corporate Control and Economic Growth : The Canadian Disease?. NBER Working Paper Series. Cambridge, MA 02138. National Bureau of Economic Research. 6814
Nuswandari. 2009. The Effect of Corporate Governance Perception Index on Company Performance in Companies Listed on the Jakarta Stock Exchange. Semarang. Journal of Business and Economics. Stikubank University.
Pitts, R.A. Hopkins, H.D. 1982. Firm diversity: conceptualization and measurement. Academy of Management Review 7, 620– 629.
Puji Harto. 2007, The Effect of Corporate Diversification on Company Performance, Journal of Accounting and Finance Vol 1.
Purbapangestu 2014. The Effect of Good Corporate Governance on Company Value with Corporate Social Responsibility as an Intervening Variable. Semarang. Journal of Accounting and Finance. Semarang State University
Ratno Purnomo. 2011. Resource-Based View and Sustainable Competitive Advantage: A Critical Review of Jay Barney's Thoughts. Purwokerto, Journal of Management and Business Vol.2 2011. Jendral Sudirman University.
R.S.H.J.Nijman, S.E Van Der Wolk, 1997. Modern Marketing Strategy, Jakarta: Erlangga,
Sekaran, Uma. 2009, Research Methods for Business, 5th Edition, Willey, New York
Shin, Hyu-Han. and Stulz, Rene M. 1998. Are Internal Capital Market Efficient .The Quarterly Journal of Economic. Oxford Journal. 113 (2) : 531-552.
Siallagan, Hamonangan dan Mas. Ud. Machfoedz. 2006. Corporate Governance Mechanism, Profit Quality and Company Value. Article National Accounting Symposium (SNA) IX, Padang.
Smith, Clifford W. and Ross L. Watts. 1992. The Investment Opportunity Set and Corporate Financing, Dividend, and Compensation Policies. Journal of Financial Economics. North Holland. 263.292.
Stein, Jeremy C. 1997. Internal Capital Market and The Competition for Corporate Resources. The Journal of Finance. Vol. LII. No. 1
Sukmawati Sukamulja. 2004. Good Corporate Governance in the Financial Sector: The Impact of Good Corporate Governance on Financial Performance. Vol.8. No.1. June 2004.
SWA Magazine. 2014. The Struggle to Become a Trusted Company. Issue 27. Jakarta
Tendi Haruman. 2011. The Effect of Ownership Structure on Financial Decisions and Firm Value
Tobin, James. 1969. A General Equilibrium Approach to Monetary Theory. Journal of Money, Credit, and Banking. Ohio State University Press. Vol. 1, No.1. pp. 15-29. DOI: 10.2307/1991374
The Indonesian Institute of Corporate Governance, Official site. www.iicg.org
Tjiptono, Fandy. 2010. Marketing Strategy, 3rd Edition, Yogyakarta: ANDI Publisher
Wernerfelt, Birger. 1995. “A Resource-Based View of the Firm”, Strategic Manajement Journal, 5: 171-180.
Wiliamson, Oliver E. 1981. The Economic of Organization : The Transaction Cost Approach. American Journal of Sociology. The University of Chicago Press. Vol. 87, issue 3. 548-577
Yeni Absah, 2007, The Effect of Organizational Learning Ability on Diversification Level Competencies and Performance of Private Universities in North Sumatra, Journal of Economics and Business. Airlangga University, Surabaya.
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Published
2021-05-03
How to Cite
Lusiana Yulianti, M., & Hendri Maulana. (2021). The Effect of Diversification Strategy and Implementation of Good Corporate Governance on Firm Value. Journal of Accounting and Finance Management, 2(2), 66–75. https://doi.org/10.38035/jafm.v2i2.58
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