Abstract
This study empirically examined the relationship between firm value and work diversification strategy of insolvent construction companies. According to the result of the empirical study, there was a correlation in the linear regression analysis on the impact of domestic insolvent construction companies work diversification on firm value after controlling company scale, leverage ratio, revenue-increasing rate and debt ratio. Also, there was statistically significant result that a construction company with higher extent of work diversification has more firm value. In addition, when there more work with more than 10% of total revenue, the company has more firm value. The reason is believed that efficient capital allocation is done by proper diversification strategy. It also implies that indiscriminate work diversification strategy has negative impact on firm value. In conclusion, certain level of work diversification is more effective as a solution of insolvent construction company bankruptcy and workout program than intensification strategy. However, indiscriminate diversification to non-major works should be avoided to secure soundness and enhance competitiveness of the company.
