Financial Hegemony, Diversification Strategies and the Firm Value of Top 30 FTSE Companies in Malaysia

Abstract

This study investigates the relationships between financial hegemony groups, global diversification strategies and firm value of the Malaysia's 30 largest companies listed in FTSE Bursa Malaysia Index Series during 2009 to 2012 period. We chose Malaysia as an ideal setting because the findings contribute to the phenomenon of the diversification-performance relationship in the Southeast Asian countries. We apply hegemony stability theory to explain the importance of financial hegemony groups in deciding international locations for operations. By using panel data analysis, we find that financial hegemony groups are significantly important in international location decisions. Results reveal that the stability of financial hegemony in BRICS and G7 groups enhances the financial value of the Malaysia's 30 largest companies, whereas the stability of financial hegemony in ASEAN groups is able to enhance the non-financial value of the firms. Overall, this paper suggests that in order to diversify globally, it is necessarily for the manager in the guest country to evaluate and fully understand the host country's geopolitical situation and its financial stability.

The Old Boys Club in New Zealand Listed Companies

“…Significant negative performance is also manifested when it is measured by stock returns (in 2013) when firm size is controlled by either total assets or its market value. These negative results are consistent with the class hegemony theory of director interlocks that was advanced by Bates (1975) and the empirical findings of Yusoff et al (2016) and Nam and An (2018).…”

“…Caiazza et al (2019) deemed interlocking directorates as an expression of hegemonic power exercised by the elites of a society. Applying this theory, Yusoff et al (2016) reported that financial hegemony negatively affects the financial value of the firm. Nam and An (2018) posited that interlocking directors opportunistically use a well-developed social network to maintain their influential position and ultimately adversely affect firm performance.…”