Corporate Governance, Diversification And Corporate Performance

The key for firm's survival and development is to choose an appropriate growth model, which should match its core competitive competence well. Diversification is a well-adopted and controversial strategy. This article analyses the relationships and the mechanism of corporate governance, diversification and corporate performance. By mining the segment report and other archives of 879 stocks listed in Shanghai and Shenzhen securities market of China, the author get detailed information of segmental sales, segmental costs and relativity of different segment in all company. With other data, this article carries through an empirical research to identify the theoretical hypotheses.The main contributions are summarized as following:Firstly, this paper set up a dynamical model originated from corporate governance of strategy management. Corporate governance structure, diversification and corporate performance can be analyzed in this comprehensive theoretical framework. By analyzing the relationships among corporate governance, strategy management and firm performance, strategy management is be found as the intermediate variables between the corporate governance and firm performance, through which corporate governance affects firm's performance. In a way, this may avail to analyze and explain the "black case" between corporate governance and firm performance. We integrate different kinds of theories in strategy management field, which are based on environment analyzing, resource view, competence view, and culture view, and so on. From corporate governance angle, factors influencing strategy management and firm performance are discoveredSecondly, according to above theoretical framework, the author construct a structure equation (SEM) model to investigate the relationships and interaction among corporate governance structure, financial feature factors, managerial discretion, corporation diversification and firm performance. The results show ownership structure and debt governance structure influence supervisor's discretion. Managerial discretion is positive to corporation diversification, significant in statistics. Internal financing elasticity and scale of firm are negative to corporation diversification. There is causality between corporation diversification and firm performance. Corporation diversification has a negative effectiveness to financial...