Corporate diversification has been a concern for corporate organizations that are determined for growth and expansion. Despite the existence of several frameworks of corporate governance and management to ensure effective and efficient management of subsidiaries and business segments, firms are still facing financial performance challenges resulting from management policies, structural and operational deficiencies, and accountability and transparency issues which could not be addressed by available studies conducted in advanced and industrialized countries with stable and low risks environment. Effect of subsidiaries diversification on the financial performance of Nigeria’s quoted manufacturing firms is an empirical panacea for developing nations. This study examines the effect of subsidiaries diversification and business segments diversification on the financial performance (return on assets, return on equity, and return on capital employed) of quoted manufacturing firms in Nigerian. The study used Ex-post-facto research design and secondary data from 42 firms out of the 63 quoted manufacturing firms in Nigeria from 2007 to 2017. Structural equation modeling (SEM) (Partial Least Squares, PLS) was used for data analysis and test of hypotheses. PLS Results indicate that while subsidiaries diversification has no significant effect, business segments diversification has a significant effect on the ROA, ROE, and ROCE of quoted manufacturing firms in Nigeria. The study concluded that the financial performance of quoted manufacturing firms in Nigeria is significantly affected by expansion through business segments The study recommends that quoted manufacturing firms in Nigeria should create more businesses with unique products and geographical locations within the main company to improve their financial performance. The study also recommends that quoted manufacturing firms in Nigeria should carefully select their choice of diversification through the creation of subsidiaries to maintain and improve superior financial performance. 

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