Corporate Diversification And Value Discount

In 2013, domestic capital market experienced a structural bull market, while the traditional industries, whose original models had encounter bottlenecks, promoted diversification strategy through M&A. Over the diversification wave, it is the pattern and structure of economic development that is changing. The old mode dominated by investment in fixed assets is too hard to continue, and the emerging industry such as TMT is in the rising cycle. In order to seek new profit growth and market space, there is no doubt that traditional corporate promote diversification strategy.This paper firstly introduced the background of research and the method used to measure diversification and corporate value. It also summarized the motivation, cost and income of diversification, and then refined research points and conclusions, providing theoretical basis for the following empirical analysis. In the empirical part, we think the diversification decision is endogenous, rather than the exogenous variables. We took advantage of both fixed effect panel model and modified model with instrumental variable to explore whether the diversification behavior of A shares of listing corporation created value or destroy value and draw the preliminary conclusions on the significant fastors which further affect the value discount or premium.