Chinese Ethnic Group’s Governance For Its Member Listed Company Based On Diversification Strategy

Many highly diversified enterprises have been established in Asian countries since 1980. It is difficult to explain that the emergence and prevalence of diversified enterprises in Asia if we adopt the perspective of the west. Therefore we have to consider that how the specific institution in transition economy of China influences the diversify operations of Chinese enterprises and whether the diversity theory of Western can explain the diversification of Chinese enterprises in practice. Exploring the diversification of Chinese enterprises is a strong complement to existing research.In recent years, with the development of M&A activities of listed companies and the improvement of control market, a group of affiliated firms grow up quickly. However, due to the weakening of external supervision.lower punishment costs and the lack of internal governance mechanisms, many ethnic groups often violate the commercial integrity, which directly affected the operations of listed companies resulting in the falling apart of ethnic groups soon after their rapid development. The enormous damage to capital markets has attracted growing concern of scholars and other interested parties. Therefore, study for the diversification strategy and governance of the ethnic groups in China is very important in theory and practice.The dissertation is comprised of seven parts. The first part mainly focuses on the diversification strategy of ethnic groups, the governance arrangements for corporate company, the diversification strategy of corporate company as well as the definition of other corporate governance mechanisms. On the basic analysis of diversification strategy of group, the governance arrangements for corporate company and other corporate governance mechanisms, we emphasized the two core points. One is the diversification strategy of ethnic groups and the governance arrangements for corporate company; the other is the effect of diversification strategy of ethnic groups for the performance of corporate companies. The second part is mainly related to theoretical literature review and assessment. After the introduction of diversification research by different perspectives, research achievements about corporate governance and diversification, the relationship between corporate governance and diversification were evaluated and the direction of this dissertation was put forward. The third part mainly discussed the evolution and development of diversification of Chinese enterprises. The unique reason of diversification of Chinese enterprises was analyzed. The importance of corporate governance for diversification strategy of ethnic groups was put forward on the base of differences between diversification of ethnic groups and diversification of normal corporate Chinese ethnic groups, as the core target of this dissertation,were compared and analyzed through their different formation paths and the limitations of corporate governance at this stage. Then we constructed the theoretical model based on the above analysis in the fourth part. Four corresponding hypothesis were put forward according to the Group’s diversification strategy and the features of governance arrangements for corporate company, the effect of governance arrangements for corporate company on the performance of corporate companies, the effect of the Group’s diversification strategy on the performance of corporate companies as well as the effect of other governance mechanisms on the performance and the diversification strategy of Group. Empirical tests of the relationship between corporate governance and diversification and effect of corporate governance on the performance were carried out in the fifth part from the point of view of the shareholding structure of corporate company, the governance arrangements,the control mode of the board of directors and executives.The research results were analyzed and discussed.The sixth part mainly included the empirical analysis and testing for the effect of diversification strategy of group on the performance of corporate company from the point of view of the-expansion model of Group’s diversification,the allocation of Group’s resources and other external governance mechanisms.In the analysis process of testing results,as a complement to the empirical research, this part combined the cases of ethnic groups in reality,and discussed the mechanism of the group’s diversification strategy and governance to further enhance the understanding that the Group’s diversification strategy, corporate governance and other governance mechanisms affect corporate performance.The last part mainly summarized the main conclusions of this dissertation,put forward the revelation how to optimize the Group’s corporate governance, diversification strategy and pointed out the research directions in the future.The innovation of this dissertation included three parts:Firstly, the study focused on the ethnic groups in China. Because the ethnic groups were the unique products in the era of Chinese economic transition, corporate governance was closely related to the success of diversification of ethnic groups. The diversification and corporate governance issues are typical Chinese characteristics due to the unique formation paths. It is important to study the diversification strategy of the ethnic groups and the corporate governance in theory and practice. Secondly, the dissertation proposed strategic dependent of the ethnic groups, in other words, the governance structure should be built according to the different diversification strategies of family member of the ethnic groups. This study supports and explains the proposition and the empirical testing result offered an important reference for how to build a complete matching mechanism of corporate governance for different diversification strategies. Finally, this dissertation linked the diversification strategy, the corporate governance arrangements for members of group and the performance of corporate company closely together, which can make the analysis for diversification strategy of listed companies more scientific and also provided an idea for how to optimize the corporate governance of listed companies.