Diversification Complementary Assets and Super Additive Synergy

Yulia Saftiana (), Sulastri Sulastri (), Isnurhadi Isnurhadi (), Mohamad Adam () and Fida Muthia ()
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Yulia Saftiana: Department of Accounting Faculty of Economics Sriwijaya University Inderalaya OganIlir Sumatera Selatan Indonesia, Postal: ID
Sulastri Sulastri: Department of Management Faculty of Economics Sriwijaya University Indonesia, Postal: ID
Isnurhadi Isnurhadi: Department of Management Faculty of Economics Sriwijaya University Indonesia, Postal: ID
Mohamad Adam: Department of Management Faculty of Economics Sriwijaya University Indonesia, Postal: ID
Fida Muthia: Department of Management Faculty of Economics Sriwijaya University Indonesia, Postal: ID

Journal of Advanced Research in Law and Economics, 2018, vol. 9, issue 2, 664-679

Abstract: Diversification is a strategy choice at the corporate level for a variety of reasons including the benefits of economies of scope or the exploitation of complementary assets synergies Although the two concepts of economies of scope and synergy are different constructs it will ultimately lead to how diversification through complementary assets that can create value Empirical testing has been done with the event study method using 117 manufacturing companies listed in Indonesia Stock Exchange to answer how the availability of financial assets and operations before diversification is invested during the diversification and its impact on performance after diversification The result of the test using the structural equation method after satisfying the assumption of goodness of fit measurement parsimony proves that the use of complementary assets at the time of diversification creates no value with the synergy sensitivity value 1 for leverage retained earning and replacement cost of investment and still contributes negatively on profitability one year after diversification

Date: 2018
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