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Corporate Diversification Strategies and Firm Value Among Nigerian Listed Non-Financial Firms
Abstract
Theoretical background: This study is underpinned by the synergy theory as it posits that the combination of complementary operations and assets to create value exceeds the sum of their standalone contributions thus driving the rationale for diversification. The theory proposed a positive interaction on firm value as value creation arising from cost and/or revenue synergies and risk mitigation make firms more attractive to potential investors.
Purpose of the article: The inclusive importance of firm value to firms cannot be overstretched as its essence lies in its representation of the overall worth of a firm as perceived by the stakeholders, investors and broader market. However, the complexities of managing diversified operations as well as difficulty in maintaining synergies have constituted a challenge to the Nigerian listed non-financial firms. Hence, this study examines how corporate diversification strategies impact on firm value among Nigerian listed non-financial firms.
Research methods: While adopting a causal research design, the Taro Yamane method of sampling selection and multi-stage sampling technique were adopted; 84 firms were sampled out of 104 listed non-financial firms; and their data was extracted through their annual reports and market data websites. Generalized least square was conducted after the preliminary analysis.
Main findings: At a 5% significance level, the results revealed that income diversification strategy significantly affect firm value; product diversification significantly affects firm value and geographical diversification impact significantly on the firm value of Nigerian listed non-financial firms. The study concluded that corporate diversification strategies contribute to the firm value by reducing dependency on a single income source while hedging against regional economic fluctuation. The study recommends that diverse sources should be explored through different innovative service models to generate more income thereby reducing overdependence on a revenue source.
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DOI: http://dx.doi.org/10.17951/h.2026.60.2.101-116
Date of publication: 2026-08-12 23:46:11
Date of submission: 2024-12-16 16:40:46
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