Research On The Relationship Between Diversification And Financial Performance Of Growth Enterprise Companies

With the continuous improvement and development of China's capital market,growth enterprise,as an important supplement to the main board market,has achieved good development in recent years.From the reality,growth enterprise companies in China are mostly high-tech small and medium-sized companies,with flexible operating mechanism and good growth,which play an important role in China's economic innovation and development.However,the development of growth enterprise companies also faces financing difficulties and weak resistance to external risks.Therefore,how to maintain the leading technology and disperse innovation risk is particularly important.Judging from the current reality and development trend of growth enterprise companies,most of them have implemented diversified business strategies to different degrees.According to the data disclosed in the annual report,the implementation of diversification strategy has certain positive significance for improving the financial performance of growth enterprise companies.However,through further analysis,it can be found that the impact of diversification on financial performance of companies in different life cycle stages is different.Diversification of some companies improves financial performance,while diversification of some companies reduces financial performance,while diversification of some companies has no significant impact on financial performance.In addition,companies of different nature and industries have different effects on diversification.For companies with a large number of fixed assets,the implementation of diversification can effectively disperse risks and enhance the competitiveness of enterprises.For asset-light high-tech enterprises,diversification will make the enterprise's resources become more scarce,which is not conducive to the development of their main business.From a regulatory perspective,China Securities Regulatory Commission in June 2010 issued the company publicly issues securities information disclosure content and format guidelines no.31-growth enterprise listed company semi-annual report content and format does not advocate the growth enterprise companies in the diversified,request the company revealed that the major risk factors in a reasonable manner to protect the interests of investors and improve the company's financial performance.It can be seen that there is no basic consensus on the correlation between the diversification of growth enterprise companies and their financial performance.Based on this,combined with the regulatory requirements of the CSRC and the actual operating conditions of growth enterprise companies,through empirical analysis,a systematic study on the correlation between the diversification of growth enterprise companies and financial performance is not only of certain theoretical value,but also of great practical significance.Based on the analysis of existing research results at home and abroad for reference,on the basis of resource based theory,transaction cost theory,market power theory,principal-agent theory,life cycle theory as the foundation,to the growth enterprise companies as the research object,according to certain rules to choose the period 2014-2018 1065 observations of 213 sample companies as research samples,through sample disclosure of annual report content and sina finance and economics website published financial data,the growth enterprise listed companies diversification empirical analysis with the relationship between the financial performance.Firstly,we select 12 indicators to measure the level of corporate financial performance from the aspects of profit,operation,debt repayment and growth,and use the principal component factor method to construct an evaluation system in line with the actual financial performance indicators of growth enterprise companies,calculate the comprehensive score of financial performance,and conduct descriptive statistical analysis.Econometrics model is used to study whether there is a correlation between the diversification of companies and their financial performance.Through regression test,it is found that the high degree of diversification of sample companies will improve their financial performance to some extent.On this basis,the paper specifically explores the correlation between diversification and four abilities of financial performance and their mechanism of action.The results show that diversification has a negative correlation with the company's solvency and a positive correlation with the company's operating ability.However,there is no significant relationship with the company's profitability and growth ability.In order to further deepen the research,this paper divides the sample companies into four stages,initial stage,namely growth stage,maturity stage and decline stage,according to the industry and enterprise life cycle by the comprehensive scoring method of life cycle,and further explores the relationship between diversification and financial performance of growth enterprise companies under different life cycles.Considering that the company in the initial stage is not likely to diversify due to its unstable development and lack of competitive advantages,this paper does not make a specific discussion on the newly established companies in the initial stage.It is found that diversification in the growing stage is negatively correlated with financial performance,diversification in the mature stage is positively correlated with financial performance,and diversification in the declining stage is not correlated with financial performance.Therefore,growth enterprise companies should strengthen the core business competitiveness in the process of operation and control the degree of diversification.For companies in the growth stage,they should focus more on their main business and avoid the loss of value caused by excessive diversification.For mature companies,they can appropriately increase the degree of diversification,to avoid excessive management costs caused by idle funds,they should timely adjust the company's diversification strategy,and make clear the future development direction.Research methods and conclusions of this paper to analysis the growth enterprise companies under different life cycle the correlation between the degree of diversification and financial performance problem provides new train of thought,not only for the future development of the growth enterprise companies and provide reference for relevant decision-making,but also for other companies in the industry diversification decisions provide certain reference.