Influencing Factors Of The Performance Of Listed Companies In China's Manufacturing Industry

In this paper, the author makes a research on the impact of diversification and corporate governance elements on corporate performance using data from the annual reports of China's listed companies in manufacturing sector. It contains five parts:In the first part, the author lists several questions which are answered by this research and describes the background of the issues raised.Second part is a review of related research. Firstly, the meaning of diversification strategy and corporate performance are defined. Then the author sums up the previous research on the motivations of diversification strategy. After that, the author makes a literature review of the the previous research and discovers that there is no widely accepted argument on the impact of diversification strategy to corporate performance. Some people believe diversification strategy can enhance corporate performance, while others say diversification strategy undermines corporate performance. And it is also suggested that the diversification and unrelated to business performance. Then the author makes review of the relationship between corporate governance elements and corporate performance. The author focuses on the relationship between ownership structure, capital structure and corporate performance.In the third part the author lists out 24 assumptions based on the literature review of previous research.The forth part is an empirical study of the impact of diversification strategy to corporate performance. Firstly the author defines the measurements of corporate diversification and performance and points out the main corporate governance elements—ownership structure and capital structure. Then selects 453 listed companies in the manufacturing sector and uses their data from 2004 annual reports to complete multiple linear regression analysis. Based on the analysis, the author makes two tests of the listed 28 assumptions.In the final parts the author draws conclusions as follows: (1) Diversification strategy undermines the corporate performance of listed companies in manufacturing sectors. (2) There is a significant positive correlation between size and profit performance, and a significant negative correlation between size and market performance. (3) There is a significant positive correlation between the proportion of outstanding shares and profit performance. (4) There is a significant positive correlation between concentration degree of ownership and profit performance. At last, according to the results of the research, the author gives several reseanable advices on corporate diversification and points out the limitations of this research.