English, Article edition: The effect of diversification on firm returns in chemical and oil industries Diane Li; Jongdae Jin

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Bookmark: http://trove.nla.gov.au/version/31484
Physical Description
  • article
Language
  • English

Edition details

Title
  • The effect of diversification on firm returns in chemical and oil industries
Author
  • Diane Li
  • Jongdae Jin
Physical Description
  • article
Notes
  • Purpose – The purpose of this paper is to investigate the effect of diversification on returns of firms in chemical and oil industries. Design/​methodology/​approach – In order to control for market effect, industry effect, and effects of endogenous variables of a sample firm that lead the firm to decide to diversify or refocus on stock returns, three-factor asset-pricing models introduced by Fama and French are used in each industry. Findings – It is found that diversified firms have significantly higher returns than focused firms in both chemical and oil industries. It is also found that the three-factor model explains much of the variation in the average stock returns for both focused firms and diversified firms, which is consistent with Fama and French. Originality/​value – Provides new evidence for the effect of diversification on firm returns in oil and chemical industries.
  • Chemical industries, Diversification, Oil industry
  • RePEc:eme:rafpps:v:5:y:2006:i:1:p:20-29
Language
  • English
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