*3.1. Data*

We use panel data for the period of 2004 to 2017. We collect the data from the financial statements of the manufacturing industry firms listed on Pakistan Stock Exchange (PSX), Bombay Stock Exchange (BSE), Colombo Stock Exchange (CSE) and Dhaka Stock Exchange (DSE) for the countries Pakistan, India, Sri-Lanka and Bangladesh respectively. For analysis, we use the data of 520 firms from manufacturing sector because this sector is positively opting the diversification strategy that needs managemen<sup>t</sup> of operations and financial activities. Table 1 describes number of firms of selected countries. We follow Campa and Kedia (2002) for the selection of sample in our study while considering the product diversification. We categorize firms as diversified when they produce more than one products, whereas we categorize firms as specialized when they produce single product. In addition, out of overall 520 sample firms, we classify 415 firms as diversified while 105 firms as single product firms.

**Table 1.** Categories of the Firms.

