Study On The Financial Risks And Control Of Diversification Of China’s Coal Companies

Diversification has been the hot topics explored by the practitioners and theorists,and also it is a very important research of modern strategic management field.Diversification enterprises in China has achieved some success, and such examplesreflect in the Chunlan, Haier, etc., but there are also some enterprises which poormanagement leads to the decline in business performance, such as Jian Libao Group,Giant Group. Diversification increases the financial risk or spreads the financial risk,there is still no consistent conclusion.As typical resource companies, coal enterprises depend heavily on naturalresources. In view of non-renewable resources of coal and cyclical,coal businessdiversification has become an inevitable choice in due course. After the mid-1990s, as aspecial group, the diversification of China’s listed companies began to been paiedattention by theorists. Diversification gradually become a very common economicphenomenon of The China’s coal companies. On one hand, both the mode of operationmay create opportunities for the development of enterprises, and promote the steady andhealthy corporate growth, but on the other hand it can enable enterprises to take greaterfinancial risks affecting the company’s normal operations. Therefore, it is particularlyimportant to study the coal companies diversified financial risk controlling, which willbe a challenging research direction.Firstly, in this paper, the content of diversification and financial risk are defined;secondly, China’s coal listed companies diversification status and financial risks facedby are briefly introducted, and analysis the impact of financial risk; once again, samplethe publicly disclosed data of China’s Shanghai and Shenzhen A-share listed companies,establish the appropriate regression model, use multiple linear regression analysismethod to study the relationgship between the two, The results shows that the degree ofdiversification significants negative correlation with the financial risk; Finally, therecommendations for improvement is putted forward to the financial risk and control ofChina’s coal companies diversification, and give some theoretical guidance andreference to China’s coal companies diversification in practice.