The impact of diversification on firm value during economic policy uncertainty period

Abstract

This research aims at assessing the relationship between corporate diversification and firm value during economic policy uncertainty periods. The research sample consists of 250 Vietnamese non-financial enterprises listed on HoSE from 2008 to 2022. We use the OLS research method to examine the relationship between the impact of diversification on enterprise value. (1) There is a correlation between firm value and corporate diversification; however, corporate diversification ought to be applied at the national or industry level; (2) economic policy uncertainty dominate this relationship; and (3) the application of diversification will enhance the relative valuation of diversified firms in Vietnam, irrespective of the state of the economy. Vietnamese businesses will benefit from having a reference for thinking about and making decisions about company diversification thanks to this empirical conclusion.