Impact of the ownership structure on the diversification strategy

Abstract

This study examines the ownership characteristics that influence the decision to diversify. The Logit model was used to show that ownership structure influences the probability of diversification. Empirical tests show that the presence of the first large shareholder increases the probability of diversification during the financial crisis period. This behavior is observed for the coalition of second and third shareholders only for periods during and after the crisis. The average level of probability for firms to be diversified is between 20% and 50%. Furthermore, results show that industrial firms and more willing to be diversified than firms in the financial sector.