This study provides evidence on ownership structures and corporate diversification by
analysing 355 public listed companies (PLCs) in Malaysia.The majority of the companies in the sample have an ultimate controlling owner, particularly an individual or family.As controlling owners have on average, rights of control over a greater percentage of shares in any given company than their rights to participate in the cash flows from that company, controlling owners may have an incentive to expropriate
minority interests through methods such as inefficient corporate diversification.The risk
of such expropriation would be expected to be reflected in the value of highly diversified
companies.The results of the research provide no evidence to support the argument that
diversification reduces the value of companies. However, the finding is consistent with
the argument that high control rights of controlling owner might encourage expropriation of minority interests through corporate diversification strategies.Thus, corporate diversification in Malaysia is perceived as a mixed blessing strategy