African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4050

Full Length Research Paper

The impact of corporate diversification on firm value in Kenya

Anthony Manyuru
  • Anthony Manyuru
  • Faculty of Business and Communication Studies, St. Paul’s University, Limuru, Kenya.
  • Google Scholar
Muturi Wachira
  • Muturi Wachira
  • Faculty of Business and Communication Studies, St. Paul’s University, Limuru, Kenya.
  • Google Scholar
Evans Amata2
  • Evans Amata2
  • School of Business and Economics, Daystar University, Nairobi, Kenya.
  • Google Scholar


  •  Received: 10 February 2017
  •  Accepted: 11 May 2017
  •  Published: 14 June 2017

Abstract

This study investigates the impact of corporate diversification on the value of firms listed at the Nairobi Securities Exchange (NSE). Panel regression techniques were used as the estimation methods. The overall findings of the study where somewhat mixed. The study finds that industrial diversification reduces firm value, but geographical diversification does not have a significant impact on firm value. When examining each industry individually, the study established that industrial diversification enhanced firm value in the agricultural industry but did not significantly influence firm value in the other industries.

 

Key words: Industrial diversification, geographical diversification, firm value, ownership structure, frontier markets.