Business diversification effects on performance and value of listed companies in Tehran Stock Exchange

In recent years، the relationship between performance and firm diversification become as an important empirical matter. The diversity strategies in company’s business are able to affect the competitive balance of an industry. The aim of this study، investigate the effect of business diversification on performance and value of accepted firms in Tehran’s Stock Exchange. To achieve this goal، the Herfindahl-Hryshmn index and TobinQ index were used to assess the business diversification and the company’s value from the market value in each year، respectively. This sample includes 125 accepted firms in Tehran’s stock exchange within 7 industries، in the periods of 1381-1390. In order to verify the hypothesis، a multiple regression based on panel data by Estimated Generalized Least Square (EGLS) was used. The results from the study hypothesis indicate that there is significant and direst relationship between Herfindahl _ Hryshmn index and the performance of studied firms in comparative industries، in semi concentrated industries، there is a negative relationship between Herfindahl _ Hryshmn index and the performance of studied firms، but not significant. Also there is a negative relationship between Herfindahl _ Hryshmn index and the value of studied firms in competitive، concentrated and semi-concentrated industries، but are not significant. In conclusion we can say that the business diversification have an significant and positive effect of performance and have non-significant and negative effects on value of studied firms.