EFFICIENCY OF CORPORATE INTERNATIONAL DIVERSIFICATION: EVIDENCE FROM INDONESIA MANUFACTURING FIRMS OVER PERIOD 2009-2013

Hosea, Marissa Kristiani and Marciano, Deddy (2016) EFFICIENCY OF CORPORATE INTERNATIONAL DIVERSIFICATION: EVIDENCE FROM INDONESIA MANUFACTURING FIRMS OVER PERIOD 2009-2013. In: The 13th International Symposium on Management (Insyma), 18-20 Maret 2016, Ho Chi Minh City, Vietnam.

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Abstract

-In a more globalized world, especially because of liberalization of trade, business practices are experiencing international market expansion and diversification. However, when a company become more internationally diversified, the firm performance of the company also will be affected naturally. Therefore, a simple question arises: “Does greater internationalization in a company lead to a better performance?”. This research is conducted to help in explaining the relationship between internationalization and current firm performance using residual income approach. Residual income is considered as an appropriate measure for strategic performance because it comprises the financial risk, measured by cost of capital, and company’s profitability. Moreover, In order to know the international diversification and long term firm performance relationship, this research uses Tobin’s Q as the representation of incorporating expectations measure. The model has been tested at the sample of Indonesian companies in manufacturing sector from 2009-2013. This research result indicated that the relationship between degree of internationalization and current firm performance follows a non-linear horizontal S-shape pattern, while the future performance, measured by Tobin’s Q follows an inverted U-curve pattern.

Item Type: Conference or Workshop Item (Paper)
Uncontrolled Keywords: degree of internationalization, firm performance, residual income, Tobin's Q
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Business and Economic > Department of Management
Depositing User: Deddy Marciano 3372
Date Deposited: 28 Jul 2017 08:29
Last Modified: 28 Jul 2017 08:29
URI: http://repository.ubaya.ac.id/id/eprint/30479

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