Research On The Relationship Of President Background?Diversification Strategy And Company Operation

In recent years, the debate about the relationship between diversification strategy and company operation has never stopped. Although there were a large number of research results and practices showed that diversification has a negative effect on company performance, there have been a lot of company which still persevere diversification strategy. For a long-term operation and development of company, what will implementing diversification strategy affect? In this paper, our listed companies are the research object, and explored the effect of diversification degree and type of diversification on the profitability, growth and risk taking in the companies operation. At the same time, considering company strategic decision and implementation, chairman, as a decider of company, is a main human resource in the company whose preference and ability will directly influence the implementation result. What is the relationship between the characteristics of chairman and company diversified operation? How would characteristics of chairman influence company diversified strategy, operation, performance and growth?The paper basing on the relevant research literature defined some related concepts of diversification and executives. Our listed companies are the research object, and explored the comprehensive effect of diversification degree and type of diversification on the profitability, growth and risk taking in the companies operation. Afterwards the research is based on Upper Echelon theory, taking chairman, a main decider when company make strategy, as the representative of executives, and studies the effect of diversification strategy on company operation in different characteristics of executives by reviewing and concluding previous findings. In this paper, valid datas of our listed companies from 2007 to 2014 were used, and using an empirical analysis method of the linear regression verified the effect of diversification strategy on company operation and the effect of the characteristics of chairman on some choices of diversification strategy and implementation result. Eventually the results showed that:1) Diversification strategy would decentralize the risk of company operation by damaging to corporate performance. According to the type of diversification, the empirical results of related diversification and unrelated diversification are opposite. The company implement related diversification strategy would undertake lesser risk and be beneficial to development of company operation.2)There are an non-significant positive correlation between age of chairman and long-term profitability of diversified companies, and a negative correlation between age of chairman and growth of diversified companies.3) There are a negative correlation between tenure of chairman and long-term profitability of diversified companies, and a positive correlation between tenure of chairman and growth of diversified companies.4) There are a positive correlation between educational background of chairman and long-term profitability and growth of diversified companies.