Diversified Companies Research Articles

Analysis of Investment in Equity: Value or Growth Investing?

Mr. TVK Vivek Kumar, Managing Partner at Bestpals Research and Advisory LLP, was searching for investment opportunities during the lockdown period following COVID-19. The stock markets witnessed a crash and most stocks were trading at decade-low prices. Mr. Kumar identified this as an opportunity for investment and wealth creation. He started scanning the stocks related to different sectors like Retail, Fast Moving Consumer Goods, E-commerce, and soon discovered the agricultural equipment and machinery sector stocks may offer attractive opportunities. He collected data related to the agricultural machinery sector and details of Indian companies operating in the Agricultural Machinery and Farm equipment sector. After reviewing the company profiles, he concluded that Escorts Ltd. and VST Tillers Tractors Ltd. were less diversified companies that mostly focused on manufacturing agricultural equipment. Upon analyzing the financial performance of the two companies, he was unable to decide which of these two companies for investments had the potential to deliver better returns. The goal was to identify Value or Growth stocks for a short-term investment horizon of 12–18 months, as he had no idea what the long-term outlook might be in the post-COVID-19 era.

Study of the best foreign practice of management of diversified companies for use at enterprises in the Russian Federation

Study of the best foreign practice of management of diversified companies for use at enterprises in the Russian Federation

Winners and Losers From Trade Agreements: Stock Market Reactions to TPP and TTIP

Which companies gain and which companies lose from trade agreements? In contrast to a view that sees the largest companies as the main beneficiaries of trade agreements, we argue that medium-sized companies gain the most from them. Moreover, we examine whether more capital-intensive and more diversified companies benefit more than other firms. Our empirical test relies on a dataset with daily firm-level stock price data for close to 4,000 US companies over the period 2009–2016. Concretely, we assess how the shares of different types of firms reacted to the news on the (lack of) progress of the negotiations aimed at concluding the TPP and TTIP. We find support for the view that medium-sized and diversified companies win the most from trade agreements. Besides speaking to the literature on the distributional effects of trade agreements, the article contributes to recent research on the role of firms in the international political economy and the stock market consequences of political events. It also presents a novel approach to measuring progress and stagnation in international trade negotiations using computational text analysis.

Exploring the link between diversification strategy and economic performance in the Moroccan real estate sector: A Data Envelopment Analysis approach

Objective – This study examines the relationship between diversification strategy and company economic performance in the Moroccan real estate sector. The research focuses on measuring the impact of diversification on technical and Scale efficiency using the Data Envelopment Analysis (D.E.A.) method. The objective is to provide empirical evidence regarding the performance differences between diversified and undiversified companies in the Moroccan real estate industry context. Methodology –Data was collected on sales, inventory, and personnel expenses to construct the input-output ratio from a sample of 60 companies in the Moroccan real estate sector. Diversified and undiversified firms were identified based on their business activities. The Data Envelopment Analysis (D.E.A.) method was then applied to measure these companies' technical and Scale efficiency. Findings – The results reveal that diversified companies in the Moroccan real estate sector exhibit significantly higher economic efficiency, around 40% compared to 31% for undiversified firms. Moreover, diversified firms demonstrate superior pure technical efficiency with a score of 47%, while undiversified firms lag at 36%. However, the two groups have no significant difference in scale efficiency. These findings highlight the positive impact of diversification on overall efficiency and suggest the potential benefits of adopting diversified strategies in the real estate industry. Novelty – This study contributes to the existing literature by exploring the relationship between diversification and performance in the particular context of the real estate industry in Morocco. The findings of this study have practical implications. Managers and policymakers can utilize the results to understand the potential benefits of diversification and consider incorporating this strategy into their business models. Type of Paper: Empirical/ Review JEL Classification: L10, R15, R30, M21 Keywords: Economic performance, D.E.A., diversification, Morocco, real estate sector, technical and Scale efficiency, slack Reference to this paper should be made as follows: Saadi, T; Zaoudi, A. (2023). Exploring the link between diversification strategy and economic performance in the Moroccan real estate sector: A Data Envelopment Analysis approach, J. Bus. Econ. Review, 8(1), 40–50. https://doi.org/10.35609/jber.2023.8.1(2)

China's diversification discount: The role of the information environment

Based on information uncertainty, in this paper, we provide a mispricing explanation for the diversification discount in the Chinese A-shares market. The empirical evidence reveals an overestimation of a diversified company's value due to the uncertain information of such companies, and this overestimation is stronger when exacerbated by high sentiment. Moreover, we provide new evidence of the year breakpoint in the diversification discount during different sample subintervals, which relies on a change in ex post mispricing related to the macroeconomic environment.

The effect of diversification on company value during a global health crisis: evidence from the COVID-19 pandemic

PurposeThe authors study the valuation effect of corporate diversification in the initial phase of the COVID-19 pandemic in 2020 in Europe.Design/methodology/approachApplying a cross-sectional regression model to a sample of public companies headquartered in the European Union, the authors investigate the existence of and the change in a diversification discount between 2018 and 2020. By applying the Excess Q methodology, the authors make an industry adjustment of diversified companies to measure the value effect of corporate diversification.FindingsThe authors find an economically and statistically significant diversification discount that increases from an average Excess Q of −0.05 in 2019 to −0.10 in 2020. The diversified companies' inferior fundamental financial performance in 2020 accompanies the discount. The results deviate from those of previous research, which mostly show a decrease in the diversification discount in economic crises, and thereby, shed doubt on whether diversification provides insurance against pandemic-induced adverse value effects.Originality/valueThe study distinguishes the role of corporate diversification during recessionary periods by establishing that the valuation effect of diversification depends on the nature of the crisis. The analysis incorporates criticism of previous studies concerning a biased methodology and uniform data source by applying the Excess Q methodology and using FactSet industry segment data.

MANAGERIAL ACCOUNTING PRACTICES OF REPORTING NONCASH EXPENSES OF SELECTED MICRO, SMALL AND MEDIUM ENTERPRISES (MSMES) IN METRO MANILA

This study primarily aims to look into the management practices of reporting noncash expenses in the Income Statement of selected MSMEs in Metro Manila. This is descriptive research. Specifically, the study examines MSMEs common noncash expenses, methods of computation and reporting, and whether these companies show lower or higher noncash expenses according to their needs. Sixteen diversified companies were interviewed. The survey results confirmed that MSMEs’ typical noncash expense is depreciation and is computed using the straight-line method. Most MSMEs record their calculated noncash expenses based on the actual value, regardless if it is for income tax or loan application. It shows that MSMEs follow the Bureau of Internal Revenue (BIR) requirements when reporting their noncash expenses in the Income Statement. Additionally, this study discovers that the accounting treatment for reporting noncash expenses provide a suitable basis for owners to review their businesses and determine how to utilize these expenses to their benefits.

564. Patient and Prescriber Characteristics Associated with Inappropriately Long Antibiotic Duration for Skin and Soft Tissue Infections

Abstract Background For common infections, previous studies suggest more seasoned prescribers more commonly use inappropriately long antibiotic durations however, there is a paucity of data regarding patient and provider factors associated with antibiotic prescription duration for pediatric skin and soft tissue (SSTI). Methods Retrospective analysis of patients age 0-21 years prescribed enteral antibiotics for cellulitis, abscess, impetigo, or other SSTI in one of 13 Nationwide Children’s Hospital’s primary care clinics in 2020. Encounters for paronychia, facial abscess, and immunocompromised patients were excluded. Based on national and local SSTI guidelines, antibiotic duration was considered inappropriately long if >5 days for cellulitis or drained abscess or >7 days for undrained abscess, impetigo, or other SSTI. Patient and prescriber factors were collected (Table 1) then univariate and multivariable analyses performed to determine which factors were associated with long antibiotic duration. Statistical analyses accounted for within prescriber correlation. Results From 1/1/2020 to 12/31/2020, we identified 1248 encounters for SSTI. After exclusions, 577 encounters with enteral prescriptions written by 89 prescribers were analyzed. Patient age ranged from 11 days to 20 years, 314 (54%) were female, and 497 (86%) had public insurance. The most common diagnosis was impetigo in 165 (29%). Similar rates of long duration were seen across patients of all ages and insurance categories. No difference in prescriber degree type was associated with antibiotic duration. Mean years since completion of medical training for prescribers of long vs guideline concordant prescriptions was 13 vs 10 in univariate analysis (p=.001). In the multivariable analysis, only diagnosis was associated with increased odds of long duration (Table 2). Compared to impetigo, the adjusted odds ratio for inappropriately long duration was 9.36 for cellulitis and 2.03 for abscess. Patient and Prescriber Characteristics for SSTI Antibiotic Prescriptions IQR, interquartile range, MD, Doctor of Medicine, DO, Doctor of Osteopathic Medicine, NP, Nurse Practitioner †Mann Whitney ‡Fisher’s exact *Chi-square ¶N=556 due to missing data for 21 encounters Multivariable Analysis of Patient and Provider Factors and Inappropriately Long Antibiotic Duration for SSTI Multivariable Analysis of Patient and Provider Factors and adjusted odds ratios for inappropriately long antibiotic duration. *Unknown insurance type for 24 encounters †Missing data for 21 encounters Conclusion In this study of antibiotic duration for SSTI, diagnosis of cellulitis was most strongly associated with inappropriately long duration- providing a focus for future stewardship efforts. Contrary to prior studies, no other patient or provider factor was associated with long duration in our pediatric primary care network. Disclosures Jack Stevens, PhD, Colgate Palmolive (although this abstract does not pertain to any products/services of that highly diversified company): Stocks/Bonds|Procter and Gamble (although this abstract does not pertain to any products/services of that highly diversiified company): Stocks/Bonds.

Dynamics of Job Satisfaction and Its Intervening Effect: An Empirical Study of Diversified Company

The purpose of this study is to unearth and bridge a population gap, which is the mediating effect of job satisfaction on the relationship between dynamics of job satisfaction, i.e., work-life balance, leadership and employee retention. This is quantitative study with hypothesis testing through correlational investigation in a non-contrive setting. Conducted with minimum researchers’ interference, the time horizon of this study is cross-sectional with individual unit of analysis, i.e. managerial employees and non-managerial employees in XYZ diversified company using 77 samples selected based on simple random sampling. Data was gathered through a self-directed questionnaire. In order to bridge the identified population gap, a set of hypotheses was developed based on theoretical and empirical justifications. The findings suggest that there is a mediating effect of job satisfaction on the relationship between work-life balance and retention. As employee retention is crucial for any organization’s success, organizations should give more emphasis on the constructs such as work-life balance and job satisfaction in order to enhance retention of employees.

Scientific Research and Recent Findings in Financial Monitoring

The article discusses the existing studies on the issue of financial monitoring and the suggestions that their authors have. The discussion of these studies begins with the American scientist Edward Altman's Z-model, which he proposed to predict the risk of bankruptcy for companies. The article presents both an earlier and a modified version of the Z-model developed by Edward Altman. The article also discusses and evaluates the 9-factor model developed by V. Fulmer and R. Saifulin and G. Kadikov's four-factor models. Among the more recent studies in the field of monitoring is the study of the Portuguese scientist Ana Paula Lopez, who found that the companies served by the audiences of the "big four" no longer cheat in the financial part. Malaysian scholars Noor Aisha Nizan and Zuhaikha Zailan found in 2019 that it is best to combine financial audits with technological and human audits. Also, in 2019, Vilnius scientist P. Poshinaus argued that monitoring should be carried out only by economic-mathematical methods, because they provide great opportunities for finding financial irregularities. And in 2020, Czech scientist Aneta Zemankova proposed to the public to use artificial intelligence in monitoring. With its implementation, smart audit procedures and smart contracts can be performed in an automated manner. The authors of the article conclude that the auditors of Georgia, due to the low level of mathematical education, cannot use blockchains and artificial intelligence, but also economic-mathematical models in the audit, and raise the issue of the need to retrain them in this direction. The article discusses the issues of dividing diversified companies into responsibility centers and their financial monitoring. Keywords: Financial monitoring; probability of bankruptcy; Z - model; Fulmer's model; mathematical models; Responsible centers.

Brexit disclosure – companies’ honest or bogus perceptions of risk?

Motivated by the recent FRC Brexit-risk reporting guidance, we investigate empirically how internationally diversified companies and those operating in industries with high/low exposure voluntarily responded to this. The paper also examines the pessimistic tone of risk disclosure in annual reports by employing Loughran and McDonald (2011)’s business dictionary capable of gauging various attributes of uncertainty. We find that while almost all FTSE 100 companies discuss this topic in their 2016 to 2019 annual reports, more international involvement results in a greater amount of information and fewer Brexit risk factors. This suggests that while internationally diversified companies respond to more pressure from regulatory requirements, they have already taken internal measures to minimize their exposure to Brexit and therefore, have downgraded their assessment of Brexit risks and uncertainties, and report it to investors accordingly. The results hold true regardless of the location of risk disclosures in the Strategic report and Financial Statements and notes. We also reveal evidence that there are some differential effects among industries depending on the exposure to the Brexit shock. Finally, our results show that internationalisation and industry exposure explain some variation in the negative tone of Brexit discussions. The increased risk reporting and negative tone may be driven by either an intentional bias or justifiably, by a lack of managerial information endowment (Dobler, 2008).

Public accountantsrsquo; adherence to professional standards and accounting ethics

Public accountants have professional responsibility to their society, their clients, their fellow practitioners and also expects them honourable behaviour by the service community. Present days, these professionals are acted unethical to the standards and code of ethics particularly in underdeveloped and developed economies. It will lead to tax evasion, reduction of tax revenue, agnosticism of certified financial reports and inconsistent economic growth of the country. This paves to execute the research in order to examine the public accountants’ adherence to the professional standards and accounting ethics in selected cities of Ethiopia. The purpose of selecting cities like Kombulcha, Dessie and Wolida due to the availability of Practitioners and diversified companies. The main objective is to investigate the degree to which public accountants operating in study areas are strictly adhere to the standards of the accounting profession. To achieve the above, descriptive research design and census sampling method was adopted to collect relevant data by using questionnaires from 68 public accountants (from both authorized accountants and authorized auditors) operating within the study area. In addition, 29 tax auditors are surveyed in the selected Revenue Office to validate the data of public accountant. Results indicate the existence of professional malpractices and non-adherence to professional standards of accounting in the selected cities. Thus, the researcher suggested to exterminate by setting up of proper mechanism as monitoring, penalty and suspension of service for violation and training through over sighting body.

Titan Company Limited: growth strategy

Subject area Corporate Strategy; Strategy. Study level/applicability Post-graduate; Executive education; Under-graduate. Case overview The case is based on Titan Company Limited (Titan), one of India’s profitable diversified companies. Set in April 2020, the case presents the evolution of Titan’s growth strategy in the last three decades. The company had grown by continuously exploring adjacent categories in the personal lifestyle space. The case asks whether the strategy that has guided Titan for the past three decades would continue to provide growth. What changes, if any, should be made by C.K. Venkataraman—the new CEO who had taken charge a few months back in October 2019—and his team? The case describes Titan’s evolution from 1987 to 2020. ‘Winning times’, the first section of the case, describes Titan’s early choices in the watches business that helped the company achieve market dominance and its successive choices to expand the scope of watches businesses by entering new adjacencies. The section also details the evolution of Titan’s design, manufacturing, marketing and retailing capabilities in early years. ‘Looking for another gem’ describes Titan’s venture into the jewellery business – the failure of its early attempts to export and its pivot to domestic market and the successful turnaround of the business. ‘On the fast track to growth’ deals with Titan’s accessories business. The section ‘Eyeing new businesses’ describes Titan’s foray into prescription eyewear and precision engineering businesses and the company’s performance in these businesses. ‘A new identity’ details Titan’s adoption of a distinct corporate identity in 2013. ‘New businesses’ provides information on Titan’s recent foray into fragrances and sarees business. The case ends with the section ‘Years ahead’ which asks what changes, if any, should be made by the leadership team. Expected learning outcomes: Upon completion of the case study discussion, participants will be able to: understand the concept of the ‘core competence’ and the three tests of core competence; how core competencies evolve in an organization over time; diversification (growth) strategy based on core competencies and adjacencies; and key managerial choices and organizational processes required to ensure effectiveness of diversification strategy based on core competencies. Supplementary materials Teaching notes are available for educators only. Subject code CSS 11: Strategy.

Flexible Use of Referents in the Construction of Organizational Identity: A Longitudinal Case Study

Rapid growth, acquisitions, and diversification are examples of major changes that often result in the need to redefine the distinctive characteristics of the organization in question thereafter. However, a sudden identity presentation that significantly differs from the past lacks credibility among both the organizational members and the organization’s external constituents. We contribute to previous research by showing the previously neglected potential that lies in the flexible selection, valuation, and spatio-temporal positioning of referents, and how this enables the construction of an identity that is simultaneously sufficiently congruent with the organization’s present activities and continuous with its previous identity. Moreover, we also reveal how this use of referents changes across the phases of organizational evolution. Empirically, our findings are grounded on an intensive case study of an organization over a 20-year time frame that evolved from a minor spin-off to a prominent and eventually to a major diversified company.

Leveraging synergies versus resource redeployment: Sales growth and variance in product portfolios of diversified firms

AbstractResearch SummaryThis article analyzes the relationship between sales growth and variance for diversified firms. Distinguishing product niches linked by scale free versus non‐scale free resources, this study predicts that the more a firm diversifies leveraging on a non‐scale free resource, the more likely its sales growth and variance are positively correlated. However, this relationship is negatively moderated by the presence of a scale‐free resource such that the presence of scale‐free resources of high value implies a negative correlation. These theoretical intuitions are consistent with data from 2008 to 2013, reflecting firm sales growth rates in five industries spanning 45 product niches in seven EU countries and the United Kingdom. These industries prioritize shelf space as a non‐scale free resource, and brand as a scale free resource.Managerial SummaryDiversifiers may base their value creation either in pursuing synergies or in exploiting the benefits derived by internal resource redeployment across products or across industries. Here, we highlight the different managerial implications on risk/performance structure derived from diversification based on resource redeployment compared to diversified companies exploiting synergies. Can the disparity of sales growth between products of the same firm's portfolio be good for the corporate performance? Here, we show that diversification based on resource redeployment goes hand in hand with a positive relation between overall firm growth and variance of results within the same firm. On the contrary, firm diversification based on synergies implies a negative relationship between within firm disparity and overall firm growth.

Характеристика влияния факторов внешней среды на устойчивость автотранспортных предприятий разного типа

The article outlines the problem of interrelation between the volume of road transport and the economic development. As a result of the interaction of economic, market, regulatory, legal, technological and other factors in the freight road transport market, a competitive environment has developed over three decades, which in its parameters is close to the conditions of pure competition. The current situation leads to a tendency towards market consolidation and an increase in the urgency of the issue of maintaining the stability of road transport companies. Stability as a condition for survival of an enterprise is considered through a combination of three properties: adaptability, stationarity and equilibrium. On the road freight market several types of transport companies can be distinguished, which form the clusters. The method of education, the stage of the life cycle, the scale of activity and the degree of diversification of the enterprise's activities are chosen as the classification features. It has been suggested that the preconditions for maintaining sustainability in enterprises from different clusters differ significantly. A list of important strategic environmental factors has been formed and the characteristics of their influence on the stability of a freight motor transport enterprise are given. The greatest threat is posed by market, economic and regulatory factors. Large, diversified companies have great potential for resilience, as evidenced by the industry statistics. An advantage in ensuring sustainability is also the foreign direct investment in the capital structure of the transport company. Small businesses, which form one of the main clusters on the market, have to form new models of maintaining stability, taking into account the changing conditions of functioning

КЛАСИФІКАЦІЯ СИНЕРГЕТИЧНОГО ЕФЕКТУ ПРИ ДИВЕРСИФІКАЦІЇ ГОСПОДАРСЬКОЇ ДІЯЛЬНОСТІ

The article deals with the issues of synergy, synergy effect and classification of synergy by various characteristics. The paper also analyzes the essence of synergy from the introducing of this concept into economics and management sphere up to the present time. The particular attention is paid to the relationship between the effect of synergy and diversification of economic activities, the mutual influence of different strategic business units of the diversified company. One of the modern trends in management is increasing the efficiency of the enterprise through diversification; diversification can be divided into related and unrelated; related diversification means entering a new area of activity that is associated with existing businesses of the company; unrelated diversification refers to a new type of activity that has nothing similar with previously organized areas of business. In turn, related diversification can be divided into vertical and horizontal. Vertical diversification occurs when the company goes back to previous stages of its production cycle or moves forward to subsequent stages of the same cycle. Horizontal diversification strategy involves the acquisition or development of new products that can be sold to the current customers of the company. In this strategy the company relies on the existing level of sales and production technology. At the same time, new products can be produced under an existing brand. This allows the company to promote quickly its products to new markets with less risk. The synergy effect during diversification means that diversifying company into a new business should offer potential for the company’s existing strategic business units and the new business to perform better together within one corporation than they would perform operating as independent units. The authors have improved the existing methodological foundations for the classification of the synergy effect by providing of a number of new classification features. In contrast to the existing approaches to the classification of the synergistic effect, the proposed classification has a multi-level structure, which allows a more detailed analysis of the phenomenon of synergy for enterprises in various sectors of the economy. Usage of the proposed classification approach should simplify for the management of enterprises choosing possible ways of increasing the efficiency of economic activity through implementing of synergy.

Problems of choosing strategies for diversifying companies

The paper considers the problems of choosing strategies for diversifying companies. It was revealed that in corporate practice, there is a certain tendency towards moderately diversified companies with related business lines (relational diversification). The authors analyzed a set of four main growth strategies: market penetration; market expansion; product innovation, and diversification. Their advantages and disadvantages are identified. Depending on the degree of risk appetite, three types of diversification were studied: horizontal diversification, vertical diversification, and lateral diversification (diagonal diversification). The reasons for diversification are analyzed, which may lie both in the environment of the company (exogenous) and within the company (endogenous). The diversification of stocks and monetary investments is considered, the advantages of this process are assessed. It is revealed that despite the fact that the advantages of portfolio diversification are undeniable, due to its complexity, it is almost impossible for investors to independently create effective security portfolios. The need to take into account systemic and non-systemic risks in portfolio diversification is proved. The ways to diversify the portfolio of stocks are described. It is concluded that in companies, regardless of whether they are expanding their services or opting for long-term product diversification, in both cases, an entrepreneurial restructuring plan can only be implemented under certain conditions.

To Diversify or Not to Diversify? – Questioning the Diversification Discount in Germany

The decision to realign a company through diversification is highly relevant not only for the board and corporate development functions but also for shareholders and other stakeholders. In research and practice, the diversification of risk and return is always considered against the background of effects on stock market valuation. In this context, the question of the extent to which diversified companies are better or worse valued by the capital market has to be answered time and again. Against this background, this study examines the effects of diversification on capital market valuations using German data. Although the fact that conglomerates trade at a discount seems to be common knowledge, the results for the German market are ambiguous and outdated. Using a 2SLS approach, our study confirms the existence of a conglomerate discount, which ranges from 6.3% to 14% depending on the measure of market value. However, we find that this discount is not caused by diversification but by the factors that affect the propensity to diversify.

Scientific and Methodological Approaches to the Evaluation of Marketing Management of Enterprises in the Context of International Diversification

Marketing management of business activities in the context of international diversification involves the construction of an appropriate system of information gathering, study of foreign markets, planning, implementation and control of the marketing program, risk and profit assessment, effectiveness of marketing decisions, development of marketing strategy of the enterprise, which allows obtaining the maximum positive result with minimal marketing costs. In this study, further development of scientific and methodological approaches to determining the state of marketing management of the activities of agricultural enterprises of Ukraine under the conditions of international diversification, consisting in the identification of problematic issues arising in the course of international business diversification; quantitative and qualitative assessment and determination of the degree of diversification of the enterprise in different markets, as well as conducting market research of the most important business segments of consumers in foreign markets and selecting the optimal exit strategy of a diversified international markets.
 Keywords: marketing management, concept of marketing management, international diversification, effectiveness of marketing management, planning, organization and control of enterprise marketing management, evaluation of the degree of diversification of activities, diversified company