Analysis On The Risk Of Diversification Of Agricultural Listed Companies

Due to the market supply of domestic and foreign products,frequent natural disasters,and agricultural product safety,coupled with the rising costs of agricultural products and low prices,agricultural companies are increasingly exposed to risks,which hinders their rapid development.In order to get out of this dilemma,agricultural listed companies are financing large amounts of money to carry out new business development,including some non-agricultural new businesses,resulting in the so-called "back agriculture" phenomenon.Scholars at home and abroad believe that the phenomenon of “back agriculture” occurs because the agricultural industry shifts risks,optimizes resource sharing,adapts to internal and external environments,and improves profit levels.Markowitz's portfolio theory also believes that as long as there is a correlation coefficient between the two asset returns,the portfolio risk will be dispersed,that is,the risk diversification effect of diversification.Agriculture is a high-risk,low-yield industry.The “back agriculture” phenomenon occurs when agricultural managers disperse company risks.However,in view of the current situation,agricultural companies with diversified operations have many problems,such as imperfect capital structure,poor profitability,unreasonable talent structure,and a high degree of dependency on agricultural subsidies,which has caused the company's risk to continue to rise.Based on the related theories of diversification and risk management,the paper defines the diversification of agricultural listed companies and their types-related diversification and non-relevant diversification-and specifies the operational risks and financial risks of the diversification of listed agricultural companies.Using a combination of qualitative analysis and quantitative analysis,using data from 45 agricultural listed companies from 2010 to 2016 as samples,the present status and degree of diversification of listed agricultural companies were analyzed.Through the establishment of a panel data regression model,the relationship between agricultural financial diversification,related diversification,and non-relevant diversification and diversification of financial risks and operating risks was explored.Based on this,we put forward the relevant proposals for the development of agricultural companies that should be relegated to nuclear development and attach importance to the main business.The conclusion of the study shows that: Diversification of agricultural listed companies cannot ease the company's operating risks and financial risks,but increase financial risks.Further analysis shows that related diversification can reduce the company's operating risk and financial risk;but non-related diversification cannot reduce the company's financial risk and business risk.At the same time,controlled variables such as highly-educated talents,agricultural subsidies and capital structure have a significant effect on corporate risk.Based on the above conclusions,the following suggestions are made:First,insist on core industries.Second,The development of refocusing,reduce the expansion of non-agricultural industries.Third,attract high-tech and highly educated personnel.Fourth,the government needs to change its subsidy concept.Fifth,optimize the capital structure and grasp the balance between debt and equity capital.