An Empirical Research On The Factors Affecting Firm Diversification Of Chinese Listed Companies

This dissertation is to study the factors affecting firm diversification. Diversification In most literature is treated as external variable,and has little concern about the factors affecting firm diversification.Using a sample of 289 Chinese listed companies during the 1999-2004 period, this paper examines the impacts of ownership structure , corporate growth potential ,performance and industry factor on diversification. Then it concluded that the level of diversification is significantly related to equity ownership of the largest shareholder. Performance has a significant impact on the level of diversification. In contract, growth potential is negatively related to diversification, but the relation between them is not significant. Finally, the level of diversification is significantly different among industries.