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A Study on the Relationship Between Diversification and Firm Performance Using the GSEM Method

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  • Huu Thanh Vu
  • Nguyen Minh Ha

Abstract

This study adds another perspective on corporate diversification and asset investment diversification, including related and unrelated asset investment diversification, and examines the relationship between this diversification, business diversification, and performance. Because business diversification includes related business and unrelated business diversification, we developed a hypothesis that related business acts as a mediating factor between related asset investment diversification and performance. Similarly, unrelated business plays a mediating role in the relationship between asset diversification and performance. We applied a general linear structural model (GSEM) to panel data on 470 firms listed on the Vietnamese stock exchange from 2008 to 2015. The empirical evidence demonstrates that related assets increase their performance through the mediating effects of related business. By contrast, unrelated assets show an insignificant impact on performance, and unrelated business does not play a mediating role between asset diversification and performance.

Suggested Citation

  • Huu Thanh Vu & Nguyen Minh Ha, 2021. "A Study on the Relationship Between Diversification and Firm Performance Using the GSEM Method," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(1), pages 85-107, January.
    • Handle: RePEc:mes:emfitr:v:57:y:2021:i:1:p:85-107
    DOI: 10.1080/1540496X.2019.1582413
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    Cited by:

    1. Xiaoquan Wang & Weifeng Wang & Chaoying Yin, 2023. "Exploring the Relationships between Multilevel Built Environments and Commute Durations in Dual-Earner Households: Does Gender Matter?," IJERPH, MDPI, vol. 20(6), pages 1-17, March.
    2. Barros, Victor & Verga Matos, Pedro & Miranda Sarmento, Joaquim & Rino Vieira, Pedro, 2024. "ESG performance and firms’ business and geographical diversification: An empirical approach," Journal of Business Research, Elsevier, vol. 172(C).
    3. Lim, Chulmin & Rowsell, Joe & Kim, Seongcheol, 2023. "Exploring the killer domains to create new value: A Comparative case study of Canadian and Korean telcos," 32nd European Regional ITS Conference, Madrid 2023: Realising the digital decade in the European Union – Easier said than done? 277998, International Telecommunications Society (ITS).
    4. Lim, Chulmin & Rowsell, Joe & Kim, Seongcheol, 2024. "Exploring killer domains to create new value: A comparative case study of Canadian and Korean telcos," Telecommunications Policy, Elsevier, vol. 48(4).

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