ABSTRACT
This paper examines the effect of diversification by using the Herfindahl-Hirschman Index (HHI) on firm value. This study uses a panel data set of 520 companies within the period 20112014. The results of multiple linear regression showed that the HHI has a significantly negative effect on firm value, or in other words, diversification has a significantly positive effect on firm value. The lower the HHI (the highest of diversification) of the company, the higher the firm value. Moreover, government ownership would weaken the positive effect of diversification on firm value.
