Global Diversification: A Longitudinal Analysis of Diversification's Impact on Firm Value

This paper examines the impact of geographic diversification on firm value over twenty-three years from 1984 to 2006. The results indicate that (1) firms have been and continue to globally diversify by every measure tested, (2) agency theory does not appear to account for this diversification trend, (3) the impact on firm value for global diversification changes over time from value destructive to value enhancing, and (4) that the impact of global diversification varies widely by industry segment. This paper shows the varying effects of global diversification on firm value using a sample of firms starting in 1984 and examines those 1984 firms over the twenty-three year period tested.