The Study of the Effect of Diversification Strategy, Cost Leader-ship Strategies and Product Differentiation on Business Unit Value
الموضوعات :
Majid Davoudi Nasr
1
(Department of Accounting , College of Management, Arak Branch, Islamic Azad University, Arak, Iran)
Mohsen Cheraghi
2
(Department of Economic, Tafresh Branch, Islamic Azad University, Tafresh, Iran)
الکلمات المفتاحية: Diversification Strategy, Cost Leadership Strategy, Product differentiation strategy,
ملخص المقالة :
Changes in credit risk may arise when either the value or the risk of corporate assets changes. Changes in the equity value associated with the changes in the asset value and changes in asset risk can be characterized into potentially countervailing direct and indirect effects. The indirect effect of risk on equity value is a function of factors that affect the debt value of including leverage, asset value, and asset risk. This study examines whether the equity value reflects the profits and losses associated with the changes in the debt value consistent with the predictions of Merton [21]. The insurance companies listed in the Stock Exchange during 2010-2015 were selected to test the desired hypotheses. It has been found that the stock returns are negatively related to the increase in credit risk as reflected in the changes of estimated bond ratings. More importantly for the research question, it has been realized that the relationship between risk changes and equity returns is negative when the leverage is higher.
[1]. Aqayi, MA, Kazempour, M, E’temadi, H, Assessment of the internal relationship of capital structure, free cash flow, variability and performance of companies listed on Tehran Stock Exchange, MS Thesis, University of Tarbiat Modarres - Faculty of management and economics. 2004.
[2]. Chen, Ch. & Yu, CH, Managerial ownership, diversification and firm performance: Evidence from an emerging market. Business Review, 2012, 21(3), P.518-534.
[3]. Hajiha, Z, Maqami, F, The impact of corporative diversification strategy on cost of debt in companies listed on Tehran Stock Exchange, Audit Knowledge Bulletin, 2004, 14, (57), P. 89-106.
[4]. Heidarpour, F., Alavi, K., Investigating the effect of diversification strategy on the performance of companies listed in Tehran Stock Exchange using entropy benchmark, scientific-research Journal of Accounting and Auditing survey, Article, 2004, 22(3), P. 385-400.
[5]. Hemmati, H, Yousefi Rad, Z, The relationship between diversification strategy and cash holding value and abnormal returns in companies listed in Tehran Stock Exchange, the Financial Accounting Experimental Studies Journal, 2002, 11 (37), P. 127-148.
[6]. Kafashpour A, Shaban Boroon, O, Rahimi, E, The study of the effect of cost leadership competitive strategy on performance considering the cost of the pioneer market-orientation mediating role, the first scientific-research conference of the management sciences new findings, entrepreneurship and education, Iran, Tehran, development and promotion institution of fundamental sciences and technologies, 2004.
[7]. Kim,Y.S., & Mthure, I, The impact of geographic diversification on firm performance, International Review of Financial Analysis, 2008, 17, P.747-766.
[8]. La Rocca, M. & La Rocca, T. & Gerace, D. & Smark, C, Effect of diversification on capital structure. Accounting and Finance, 2009, 49(4), P.799-826.
[9]. Laksmana, I., and Y.W. Yang, Product Market Competition and Earnings Management to Meet Earnings Targets. Advances in Accounting, incorporating Advances in International Accounting, 2015, 30, P. 263–275.
[10]. Lien, Y. & Li, SH, Does diversification add firm value in emerging economies? Effect of Corporate Governance. Journal of Business Research, 2013, 66(12), P.2425-2430.
[11]. Ozkan-Canbolat, E, Social Capital Influences On Business Groups’ Diversification Strategies. Procedia - Social and Behavioral Sciences, 2011, 24(0), P.1436-1443.
[12]. Park, K & Jang, S, Effects of within-industry diversification and related diversification strategies on firm performance. International Journal of Hospitality Management, 2013, 34, P.51-60.
