Research On Diversification And Corporate Performance Of China's Agricultural Listed Companies

Agriculture is the foundation of national economy,the central government has always attached great importance to the development of agriculture.Since 2004,the central document of "number one" has focused on the problem of "agriculture,rural areas and farmers",and in 2017 the document emphasis to boost agricultural supply side structural reform,optimize the agricultural industrial system,production system and management system.Agricultural listed company is the leading enterprise of agricultural industry,representatives of advanced productivity in China's agriculture industry in the present stage,they are leading and guiding roles for the development of agricultural industry.Currently most scholars focused on the linear relationship between diversification and corporate performance of China's agricultural listed companies.The researches are mainly empirical and the theoretical analysis is weak.Most scholars believe that diversification does not effectively improve corporate performance and significantly reduces corporate performance.Some scholars believe that there is a positive correlation between the two factors.A few scholars paid attention to the nonlinear relationship between diversification and corporate performance,and carried out the empirical test.However,nearly no research on whether there is a hysteresis effect about the effect of diversification on corporate performance.Based on this,this paper makes a theoretical analysis based on the theory of diversifion,resource base theory,scope economic theory and hysteresis effect theory.On the basis of existing research,this paper uses threshold regression model to explore China's agricultural listed companies of the nonlinear relationship between diversification and corporate performance.On the basis of static threshold regression model,this paper puts the lag issue of diversification into the model to explore diversification sustained impact on corporate performance.The results show that:(1)there is no significant linear correlation between the diversification and corporate performance of Chinese agriculture listed companies,diversification doesn't generate a significant linear impact on corporate performance.(2)There is a significant threshold effect between diversified operation ofChina's agricultural listed companies and corporate performance,and diversified operation has asignificant non-linear effect on corporate performance.Specifically,the company's assets are 1.849 billion yuan to distinguish the threshold of the size scale for Chinese agriculture listed companies,which also generates structural changes on company performance.When the company's assets are less than 1.849 billion yuan,the company's resource accumulation has not reached the threshold value,and the company has no surplus resources as the basis for diversified operation.At this time to carry out the diversification does not reduce the unit cost of production,but is likely to make the transaction costs rise,diversification is likely to reduce corporate performance;When the company's assets are larger than 1.849 billion yuan,the companys gradually have resources,and with the improvement of management ability and management experience,the company can effectively allocate and transfer the remaining resources.At this time,diversified operation can be carried out to realize the resources of different production departments and industries to share company resources,share the production cost,reduce the unit production cost,increase the income,and realize the scope economy.Diversification significantly improves corporate performance.When the assets of China's agricultural listed companies are relatively small,especially when they are less than 343 million yuan,diversification is likely to have a significant negative impact on corporate performance.With the expansion of the company's scale and the improvement of management ability and management experience,the negative influence of diversified operation on corporate performance will gradually decrease.Until the company's scale exceeds 1.849 billion yuan,diversified operation can bring significant positive benefits to the company.(3)There is a significant hysteretic effect on the impact of diversification ofChina's agricultural listed companies on corporate performance.When company assets are less than 850 million yuan,the diversification of previous period could have negative impact on current corporate performance which is the most significant,showing that the diversification of previous period increase 1 unit will cause the current corporate performance significantly be reduced by 0.1486 units;The diversified operation of the company with assets are more than 850 million yuan but less than 1.849 billion yuan also have a significant negative impact on the current performance.However,compared with the former,each additional unit will reduce the company's performance by 0.0728 units.When company assets are more than 1.849 billion yuan,diversification of previous period have a positive effect on the current performance.When the company assets are less than 1.849 billion yuan,the diversification of China's agricultural listed companies have a hysteretic and persisent influence on corporate performance,and it's a significant negative impact.The diversification strategy in this stage is not conducive to the healthy growth of the company.Until the company's asset size is greater than 1.849 billion yuan,the significant hysteretic negative influence will gradually fade away.Finally,based on the research results,this paper puts forward some suggestions on the strategic choice of managers and the regulation of the agricultural industry for government.As for managers,the diversification strategy depends on the company's resource.When the company's assets are larger than 1.849 billion yuan,agricultural listed companies can carry out appropriate related diversification.But when asset size is less than 1.849 billion yuan,especially is less than 850 million yuan of agricultural listed companies should avoid cross-industry business risk as much as possible,focusing on developing agricultural business actively.As for government,the government should carry out more preferential policies for companies which actively develop agriculture to encourage them to make countious effort for agriculture industry's development.It is necessary for government to formulate and implement relevant industrial policies to regulate the diversified operation of agricultural listed companies which deviate from agriculture.