THE IMPACT OF COMPANY DIVERSIFICATION ON FIRM VALUE OF LISTED COMPANIES IN INDONESIA

This study aimed to investigate the impact of company diversification on firm value. Manufacturing companies that listed in Indonesia Stock Exchange is chosen as the sample of research and 220 companies during 2013 – 2015 were selected as the sample. Firm value summarizes the collective valuation of investors about how well a company is, whether its current performance or its future projection. The firm value will be reflected through the company's stock price (Brealey et. al, 2007). According to previous researches, company diversification becomes one strategy that can affect firm value. Some research said that the more the level of diversification, the higher the firm value. The other research found different result where the higher the level of diversification, the lower the firm value. Diversification is calculated using the formula from Berger and Ofek (1995). Firm value is calculated using Tobins’ Q. The result of study comes up with conclusion diversification has positive impact on firm value