Research On The Impact Of Diversification On Corporate Performance

The original intention of the company to implement diversification is to expand the business scale,obtain more resources,achieve overall coordination,and then bring better development to the company.However,the evaluation of its implementation effect has not formed a unified point of view.A large number of scholars at home and abroad have formed three different conclusions: diversification discount,diversification premium and diversification neutrality.On the basis of previous scholars’ research,this paper sorts out and summarizes relevant achievements,introduces financial leverage and equity checks and balances that can affect the relationship between the two from a new research perspective,explores their role in diversification and corporate performance,and takes into account the company’s growth and cash flow level in the research to further enrich the research content.Based on the background of listed companies’ implementation of diversification strategy,this paper selects the companies listed in Shanghai and Shenzhen stock markets from 2011 to 2020 as the research object,and discusses the impact of financial leverage and equity check and balance on the performance level of diversified companies through theoretical and empirical analysis.The results show that the diversification of Listed Companies in China will reduce the company performance and appear the phenomenon of diversification discount;Rational use of financial leverage can positively regulate the relationship between diversification and corporate performance;Reasonable adjustment of equity allocation and establishment of equity checks and balances can positively regulate the relationship between diversification and corporate performance;These two methods can effectively alleviate the diversified discount phenomenon of the company,and the positive regulation effect of financial leverage is stronger in low growth companies,and the positive regulation effect of equity check and balance is stronger in high cash flow companies.Therefore,the rational use of financial leverage and equity checks and balances has a strong guiding significance for diversified companies to improve their overall performance,improve the management restraint mechanism and guide their own governance practice.