TY - JOUR
T1 - ASSET INVESTMENT DIVERSIFICATION, BANKRUPTCY RISK and the MEDIATING ROLE of BUSINESS DIVERSIFICATION
AU - Thanh, Vu U.H.U.U.
AU - Ha, Nguyen Minh
AU - McAleer, Michael
N1 - JEL Classification: G11, G32, G33, L25, M21, O16
Publisher Copyright:
© 2021 World Scientific Publishing Company.
PY - 2021/3/1
Y1 - 2021/3/1
N2 - This paper explores the structural relationship among asset investment diversification, business diversification and the bankruptcy risk of firms. Asset investment diversification is divided into two components, namely related and unrelated asset investment diversification, while business diversification includes related and unrelated business diversification. In the hypothetical relationship, business diversification is proposed to play a mediating role to explain the effect of asset investment diversification on bankruptcy risk. Specifically, related and unrelated asset investment diversification affect bankruptcy risk through two mediators, namely related and unrelated business diversification. Hence, it is vital to employ the general linear structural model (GSEM) with panel data on 470 businesses publicly listed in Vietnam from 2008 to 2017. Surprisingly, the empirical results show that both related and unrelated asset diversification have positive impacts on bankruptcy risk. Nevertheless, only related business diversification plays a mediating role between related asset diversification and bankruptcy risk, while unrelated business diversification has an insignificant mediating effect on the relationship between unrelated asset diversification and bankruptcy risk.
AB - This paper explores the structural relationship among asset investment diversification, business diversification and the bankruptcy risk of firms. Asset investment diversification is divided into two components, namely related and unrelated asset investment diversification, while business diversification includes related and unrelated business diversification. In the hypothetical relationship, business diversification is proposed to play a mediating role to explain the effect of asset investment diversification on bankruptcy risk. Specifically, related and unrelated asset investment diversification affect bankruptcy risk through two mediators, namely related and unrelated business diversification. Hence, it is vital to employ the general linear structural model (GSEM) with panel data on 470 businesses publicly listed in Vietnam from 2008 to 2017. Surprisingly, the empirical results show that both related and unrelated asset diversification have positive impacts on bankruptcy risk. Nevertheless, only related business diversification plays a mediating role between related asset diversification and bankruptcy risk, while unrelated business diversification has an insignificant mediating effect on the relationship between unrelated asset diversification and bankruptcy risk.
UR - http://www.scopus.com/inward/record.url?scp=85103983958&partnerID=8YFLogxK
U2 - 10.1142/S2010495221500019
DO - 10.1142/S2010495221500019
M3 - Article
AN - SCOPUS:85103983958
SN - 2010-4952
VL - 16
JO - Annals of Financial Economics
JF - Annals of Financial Economics
IS - 1
M1 - 2150001
ER -