Research On Value Growth Drivers Of The Listed Diversified Companies

The strategy of diversification is always an important content of the corporate strategy decisions and its influence and function on the corporate value have caused the attention of domestic and foreign scholars. However, after Rumelt’s groundbreaking studies, scholars have different opinions on factors of listed companies’ value growth. Until the1990s, our business began to independently implement the diversification strategy. In these diversified companies, there are many performance leaders, while there are also a lot of companies which are bankrupt due to adopting the diversification strategy. This study using a sample of diversified listed companies deeply studies the factors and the mechanisms of the value growth of the listed diversified companies.Firstly, the study introduces its topic basis and the research progress both at home and abroad with which defining the methods and the technical route of of the research. In view of the existing research progress both at home and abroad, sorts the theory of diversified value, enterprise value and value growth. At the same time this study analysis the achievements and shortcomings of the research of the drivers of enterprise value growth by domestic and foreign scholars, studies the value evaluation model of diversified companies deeply, and based on free cash flow model selecting the listed corporation as the samples to evaluates the value of diversified companies and reveal the phenomenon that the value of the diversity listed companies grew faster than that of the non-diversified company.Secondly, selects and identifies the value growth drivers of the diversified companies. By reading and sorting of literatures, the drivers of the value growth are divided into five categories as corporate governance, investment and financing behavior, capital structure, characteristics of corporate finance and other factors. Then we based on these five categories with Delphi method to design questionnaire. And21indicators are selected from52indicators through the analysis of data on expert opinions. After that another questionnaire aiming to the executives of the listed corporation is designed. Then with the reliability and validity analysis of the scale through factor analysis method to establishes a indicator system of value growth drivers of diversified company--corporate governance,investment expenditure,nature of equity, financial characteristicand determine the weight of each index finally.Thirdly, the drivers which affect the value growth of the listed diversified companies are studied using all the sample data. Mainly researches the contribution of the corporate governance, the investment and the diversified types to diversified value growth. Through choosing all listed companies in Shanghai and Shenzhen exchanges between2007-2013as samples and using three indicators-SN, HHI and El to measure the degree of diversification in China’s listed companies, we build the linear model with value growth rate as the dependent variable and drivers as independent variables and we use the least square method (OLS) to confirm the role that corporate governance, investment and cross action of these two variables on the companies’ value growth.Finally, since there could be a complex endogenous relationship between the drivers of the value growth of the company, in order to better explain the mechanism of the variables affecting the value growth of diversified listed companies, in this study, based on the basic theory of the growth mechanism of the diversified company, we build structural equation modeling of the value growth of the diversified listed companies in which the three aspects of the corporate governance as exogenous latent variable, diversified companies’ value growth rate as internal latent variable and the corporate efficiency as the intermediate variable. And through empirical testing and recycling correction model, we get the coefficients of each driving factor that contribute to the value growth which clearly reveal the impact of the drivers of value growth and the impact mechanism between each other.The result of this research fills the shortage of the drivers of diversified enterprise value growth, helps the manager improve the management, offers a new method for improving the enterprises’value continuously.