The Relationship Between Corporate Financing,Diversification Strategy And Return On Asset

Diversified in recent years,more and more domestic enterprises have stepped onto the road of economic background,does the diversified really benefit to the raise of ROA? The continuous development of capital market promotes the process of diversification,what role does corporate finance play in the process of diversification effect on ROA? With the above problems in mind,this paper carries out a systematic analysis based on the empirical results.Through multiple regression,it studies the influence of diversification on return on asset(ROA)and the role of corporate financing in the process of "degree of diversification--return on asset",and finally carries out a robustness test.As diversification strategy is a means to extend the life cycle of enterprises,this paper also takes the factor of life cycle into consideration.Due to the different development status of companies in different life cycles,this paper believes that the relationship among the three will also be different.Finally,three conclusions are drawn:1.The increase of the number of businesses and regions is advantageous to ROA,while the degree of dispersion is unadvantageous to the ROA.2.In the growth stage and maturity stage,business diversification has a negative impact on the return on assets,while regional diversification has a positive impact on the return on assets 3.Only in the mature stage,the increase of corporate financing will worsen the effect of diversification on ROA.The conclusions prove empirically that business diversification has a negative impact on corporate performance,while geographical diversification has a positive impact.Financing of mature companies need to be examined more carefully,because the increase of financing funds at this stage will worsen the effect of diversification on ROA.