The Effect of Financial Market Frictions to Firm’s Diversification Level in Indonesia

DOI

10.2991/aer.k.210121.051How to use a DOI?

Keywords

Diversification, Financial market, Conglomerates, Market friction, Internal market

Abstract

New interesting facts had emerged within the last few decades. Diversification behavior of firms are believed to increase in parallel with the pattern of external market frictions. Firms with high level of diversification can alter the cost of tight financial market frictions by reallocating capital internally between divisions. Several facts are argued and demonstrated in determining whether diversification creates higher value and benefit for firms during times of distress. Using data provided by the Indonesian Stock Exchange (IDX) and the Indonesian Bond Pricing Agency (IBPA), it is verified that well-diversified firms in Indonesia can mitigate the shocks in the external market. This research is conducted under a time period of 10 years, from 2008 to 2017.

Copyright

© 2021, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Michele Gonatha
AU  - Rita Juliana
PY  - 2021
DA  - 2021/01/21
TI  - The Effect of Financial Market Frictions to Firm’s Diversification Level in Indonesia
BT  - Proceedings of the 4th International Conference on Sustainable Innovation 2020-Accounting and Management (ICoSIAMS 2020)
PB  - Atlantis Press
SP  - 361
EP  - 369
SN  - 2352-5428
UR  - https://doi.org/10.2991/aer.k.210121.051
DO  - 10.2991/aer.k.210121.051
ID  - Gonatha2021
ER  -