In Taiwan, ownership structure is separated to differentiate between family businesses and non-family businesses. Moreover, the dynamic relationship between managerial ownership and corporate diversification is complicated. This study is attempted to examine, under different ownership structure, whether managerial ownership is associated with subsequent changes in diversification or diversification is associated with subsequent changes in ownership. This study used a sample of firms listed in Taiwan from 2002 to 2011; the Panel Data Regression with fixed effects model is utilized to find the relationship between managerial ownership and diversification. This result shows that in non-family businesses, managerial ownership (diversification) is negatively related to subsequent diversification (subsequent managerial ownership); in family businesses, managerial ownership (diversification) is positively related to subsequent diversification (subsequent managerial ownership). Therefore, investors should understand the business strategy that lead to changes among family business, managerial ownership and diversification in order to facilitate investment decisions.