Year: 2021
Type: article
Abstract: We consider the effect of reinvestment on shareholder value to answer whether diversification decreases or increases shareholder value. We build static panel regression models for the sample of 1189 Taiwanese firms for 2009-2019. We also account for dynamic features associated with shareholder value and utilize Generalized Method of Moments estimates for a dynamic panel. There is robust evidence that reinvestment activity adds shareholder value. We also argue that current reinvestment activity leads to higher values of the closing price. Analysis reveals that the interaction effect of the normalized value of cash outflow and firm size leads to higher excess returns.
Authors: Ilia Tetin, Elizaveta Antonenko
Institutions: I-Shou University, South Ural State University
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4200513201