The Relationship Between The Diversition Of Listed Companies And Their Performance

This paper uses a sample of 50 listed companies that went public in Shanghai Stock Exchange and Shenzhen Stock Exchange in 1993 and 1994. Using the method of means comparison and ANOVA, I examined the impact of diversification strategy on their performance. Beside this, I also examined the impact of industry structure and shareholding structure on their diversification strategy. The key findings are as the following: For China's listed companies, the performance of diversified companies is better than the undiversified companies. Among the factors of diversification strategy, such as diversification degree, diversification type and diversification mode, diversification type has the most significant impact on the performance. Meanwhile the other factor does not have a significant impact on the performance. The performance of unrelated diversified companies is better than diversified companies, but their performance volatility is also higher than the latter. This finding is in consistent with that of the foreign scholars. There is no significant difference between the market value premium of unrelated diversified companies and related diversified companies. This means diversification type does not have a significant impact on the market value of the listed companies. The impact of industry structure and shareholding structure on the diversification is also significant. The single-business companies enjoy a higher industry...