This study investigates how investors perceive the impact of U.S.-based MNCs geographic and business segment diversification upon their earnings performance. Pooled cross-sectional annual earnings response regressions for the years 1993 through 1997 are used for this investigation. Our results show that geographic segment diversification is valued by investors more than the business segment diversification especially in two cases: 1) when the business segmentation is low; and 2) when geographic segmentation is high. These results imply that business segment diversification is only valued when it takes place in international markets where it is relatively more difficult for individual investors to replicate industry diversified portfolio for themselves. Our research illuminates the contextual aspects of investors' perceptions of geographic and business segment diversification for multinational corporations by explicitly controlling for one dimension of corporate diversification while examining the earning-returns impact of the other type of corporate diversification.