Abstract
South African companies share values have reported continued growth over the past 10 years from 2007 to 2017 against a low growing economy. Many believe that this growth has been attributed to the geographical diversification by South African companies. This study is undertaken to understand the effects of geographical diversification on company stock value. Previous studies on the subject present varying results with majority of studies based on USA domiciled companies reporting stock value loss when diversifying outwardly while some studies on emerging economy domiciled companies report stock value growth when diversifying outwardly. The sample used in the study is the JSE top 40 listed companies as at May 2017 and a quantitative research approach was used in the form of a fixed effect panel regression model (LSDV). The empirical results of this study do not find that geographical diversification is significant in explaining the variation in company stock value, that the strategy does not add or destroy value for companies.
M.Com. (Finance)