Corporate governance and firm diversification : evidence from Thailand

Abstract

The primary objective of this paper is to investigate relationship between corporate governance and firm diversification based on agency theory. Samples are listed companies in Thailand during 2000 to 2007. I apply corporate governance index covered all issues related to corporate. Next are degree and value of diversification. The first one is measured by Herfindahl Index and number of reported segments while the latter is from Excess Value. Excess Value stems from firm excess value as a result from diversification. For corporate governance and decision to diversify, it identifies that corporate governance is responsible for decision to diversify bringing about a confirmation of agency but not affect value of diversification. Aside from academic benefits, this paper sends a signal for stakeholders/ monitors about severity of agency problem in corporate/Thailand to pay more attention in monitoring and controlling the firm in order to reduce agency problem and increase corporate governance in those firms/Thailand.