Ownership identity and mitigation of diversification discount: Evidence from Malaysia

• Main Authors: Lee, Kian Tek *, Hooy, C. W.
• Format: Article
• Published: Malaysian Economic Association 2018
• Subjects: HF Commerce
• Online Access: http://eprints.sunway.edu.my/1404/; https://mjes.um.edu.my/article/view/11767/7846; https://doi.org/10.22452/MJES.vol55no1.6
• Institution: Sunway University

This paper examines the mitigation effect of the ultimate ownership identity on the diversification discount under the emerging market’s institutional setting. Using a sample of non-financial listed firms in Malaysia from 2002 to 2013, the study reveals that government ultimate ownership is able to mitigate the diversification discount better than family ultimate ownership by 5 to 43 percent, whereas family ultimate ownership is better than foreign ultimate ownership in mitigating the diversification discount by 30 to 118 percent. Our study also finds that a high degree of ownership concentration gives rise to the diversification discount.