An Empirical Research On The Diversification Strategy Of Parent-subsidiary Corporation And Governance Mechanism

Multiplication strategy is an issue the corporations must be faced with and make decisions when at some specific development stages. The current theorists mainly focus their attention on the areas of multiplication strategy and corporation performance, and just few studies put emphasis on analyzing parent-subsidiary corporation management. What'more, most existing studies are based on the data of foreign large-scale corporations. For the studies focusing on domestic corporations, they mostly are qualitative analyses, while quantitative analyses are rare. Therefore, choosing numbers of listed corporations as objects of study, this essay preliminarily investigate the relationship between multiplication strategy of parent company and management of subsidiary, in order to deal with the match issue of this relationship, thus providing recommends about how to improve the structure of corporation management. This essay possesses both theoretical meaning and realistic meaning.Aiming at the problem, this paper first cards the related documents about the existing diversity and corporate governance, then puts forward a conceptual model and theoretical assumptions. Analyze the selected samples by descriptive statistics and regression analysis methods; the study draws the relationship between parent company's diversification strategy and subsidiary governance. The specific conclusions are as follows:the more relevant the parent company's diversification strategy business, the higher the proportion of its subsidiaries equity held by the parent company; the more relevant the parent company's diversification strategy business, the lower the balance function of the other major shareholders of subsidiaries. There is no relationship between the correlation of the parent company's diversification strategy and the combination of the chairman and manager positions in the parent company and subsidiary. The more relevant the parent company's diversification strategy business, the stronger the parent company's control on the subsidiary, the more relevant the parent company's diversification strategy business, the stronger the control on subsidiary managers.Recommendations on structure:Listed company should gradually reduce the degree of non-related diversification to ensure the company's core competitiveness and achieve economies of scale; Optimize the company's governance structure using strategy-oriented, in order to achieve the match between governance structure and strategy, improve company performance; Strengthen the supervision and control of the controlling shareholder, through the improvement of internal governance and external supervision, further enhance the value of the company.The innovations of this paper are:First, introduce the parent company's governance arrangements to the subsidiary to the research on diversification strategy and corporate governance, providing a new perspective to the study on diversification strategy and corporate governance. Second, selecting listed companies of 2007-2009 as the sample group has some guidance and reference for current companies.Due to the limited ability of the study, the paper still has some limitations. The future study can do from the following several aspects:First, expand the scope of the study and increase the sample data to obtain more representatives of the research results. Second, further refine the corporate governance mechanisms on the basis of this paper and discuss as fully as possible to provide more reasonable and more comprehensive proposal on how to optimize the corporate governance structure. Third, conduct in-depth analysis combined with policy background and study the impact of the unique market environment in China on the diversification strategy to provide a new perspective for the enterprise group's diversification strategy.