The Study Of The Effect Of Diversification On The Corporate Performance In China

This thesis empirically examines the effect of diversification on the corporate performance. Such a result implies that both the performance of the inner performance and outer market performance of centralized firms are higher than decentralized firms. And at the same time, the strategy of related diversification has the positive effects on the outer performance related to profit of the unrelated diversified firms, while the coporate performance have nothing to do with the type of the diversified strategy. Finally, the scale of diversified corporations contributes to rate whether the inner performance or outer performance.There are five parts in this thesis: diversification strategy and literature review, empirical study, the results of diversification, results analyse and proposal.In the first part, the historical studies of diversification strategy have been reviewed from the theoretical and empirical points.In the second part, the cause why diversification strategy has been taken is also summarized, including new development of technologies, diversified requirements from the society, the characteristics of the industry and so on. At the same time, the risks of diversification are also summarized.In the third part, the relationship between diversification strategy and performance which it produced has been discussed.In the fourth part, 58 listed companies in Shanghai and Shenzheng Stock Exchange have been selected. Using these annual reports of sample companies from 2001 to 2004,we have built a statistic model to examine the impact of diversification on the firm performance.Some important results have been acquired accordingly.In the final part, overall discussion has been made according to the empirical results.Some proposals about diversification strategy also have been put forward. Finally, we give advices on the future research.