This study aimed to investigate the impact of company diversification on
firm value. Manufacturing companies that listed in Indonesia Stock Exchange is
chosen as the sample of research and 220 companies during 2013 – 2015 were
selected as the sample.
Firm value summarizes the collective valuation of investors about how well
a company is, whether its current performance or its future projection. The firm
value will be reflected through the company's stock price (Brealey et. al, 2007).
According to previous researches, company diversification becomes one strategy
that can affect firm value. Some research said that the more the level of
diversification, the higher the firm value. The other research found different result
where the higher the level of diversification, the lower the firm value.
Diversification is calculated using the formula from Berger and Ofek
(1995). Firm value is calculated using Tobins’ Q. The result of study comes up with
conclusion diversification has positive impact on firm value.