Impact of Diversification on Firms’ Performance

The data was collected through secondary research and Stock Exchanges sites were the source of information to collect the data of the companies. Total 40 companies were selected on the basis of Specialization Ratio (SR). Companies whose information were available and remained in the same category for the entire 5 years (2005-2009) were included in sample. The results of this study showed that there is no positive relationship between diversification and firms' performance. All firms are performing equally whether they are highly diversified firms, moderately diversified firms or less diversified firms with respect to their return and risk dimensions