Ownership Identity And Concentration:a Study Of Their Impact On Corporate Diversification

Corporate diversification is a strategy and has become a way of growing into a modern industrial enterprise which is commonly used after a certain stage. While corporate diversification has received considerable attention from its impact on the performance of company, this paper argues that explored the company’s intrinsic motivation is necessary. This paper considers how the identity of owners moderates the impact of ownership concentration on diversification strategies. Based on a study of472listed manufacturing enterprises on2012,I found that family ownership concentration has a positive impact on corporate diversification while the impact of state ownership concentration is negative. This is the first study to identify the ownership identity of different corporate.Because of the property rights discrimination, it is more difficult for family enterprise to access to external finance, and its financing capacity has been greatly constrained. They have a strong incentive to be diversified in order to establish an internal capital market to ease external financing difficulties it faces. In addition, because the family business personnel in the company invested a lot of private property, they pay more attention to reducing the company’s risk. Due to the centralized management of enterprise development susceptible to high market capacity constraints, once the business is in crisis, companies have no other product can make; while diversification has a significant advantage-risk diversification, enterprise engaged in the production of multiple products or by areas of industry operations, achieve business expansion, allowing companies not because of a deterioration in certain areas of the business environment and the overall damage, thus effectively reducing the overall risk of the enterprise.State-owned enterprises are the main target of China’s four major state-owned banks to lend, and its financing relatively relaxed environment; addition, in the institutional context of emerging economies and transition economies, a high degree of concentration of ownership of state-owned enterprises, their managers are often sent by the relevant government departments person as such benefits managers and major shareholders in line with the increase of concentration of ownership, the cost of government and operators of diversification will increase, therefore, the state-owned enterprises tend to centralize policy.