The Effects of Diversification Strategy upon Cost of Equity Capital: A Global Perspectives

• Main Authors: Shang-WeiYu, 游尚衞
• Other Authors: Ming-Long Wang
• Format: Others
• Language: en_US
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/45518814282746965293

碩士 === 國立成功大學 === 財務金融研究所 === 102 === This study mainly examines the relationship between corporate diversification and a firm’s cost of equity capital. Our total sample is 12,474 firm-years from 40 countries. The results show that diversified firm’s cost of equity capital is larger than that of standalone firms. Further, we also examine the effects of different types of diversification on firm’s cost of equity capital, and perform the regression using the sample of total firms and diversified firms on cost of equity capital with two diversification measures. The results of the model for the total sample show that the effect of unrelated diversification on the cost of equity is higher than the effect of related diversification. The results of the diversified firms’ regression model also show a firm’s cost of equity capital increase with the degree of unrelated diversification.