Research On Diversification Strategy's Performance Of Real Estate Listed Companies In China

In an increasingly competitive society, diversification is one of the key strategies to its survival and development. Diversification Strategy is a very common phenomenon in the domestic and the international society; there are a certain proportion of diversified enterprises in China's listed companies. Will diversification strategies affect the financial performance of the enterprise? If the answer is yes, then, it can give us more benefits or loss? In empirical studies, we can find some enterprises paid a heavy price for diversification, while others are fruitful. In this connection, scholars can't advance a conclusive theory, so the exploration is put in the process.Real estate is one of China's pillar industries, it is all important to the national economy and the people's livelihood. In this article, the author give a detailed review of previous research on diversification and financial performance, and then make this assumption, build mathematical models.Secondly,selected the real estate industries as the object of study, did the demonstration research in the performance of the listed firms belonged to the real estate industries base on aggregate extent of diversification strategy,the extent of diversification strategy relativity and types of diversification strategy during 2006 to 2008 by using real diagnosis analysis. The result proved that: the level of diversification in listed Companies in China's real estate is generally low, and the level of diversification and firm performance is irrelevant. There is no correlation between the diversification type and financial performance in real estate. To further confirm the above conclusions, the author deliberately chose coal industry, with high overall profits just like the real estate industry in recent years. Through an empirical study of the relationship between diversification strategy and financial performance in coal industry based on the data during 2007 to 2009.Concluded that, to the listed companies in coal industry, there is no correlation between diversification and financial performance.