Small And Medium-sized Listed Companies In The Financial Performance Of The Diversification Strategy

Diversification strategy plays an important role in development of the company. Many scholars had done a lot of empirical research of it, and there was no same conclusion. How does diversification strategy bring growth for companies, and how does it effect on finance of the companies? How do SMEs apply the diversification strategy avoid the finance risk? So it is important to research the diversification strategy of SMEs.Based on these issues, this article reviewed the relevant literature, defined the related concept, and analysis the diversification strategy and the financial performance of SMEs. This paper analyzes the relationship between the diversification strategy degree, type or mode and financial performance which is measured by growth and financial risk. Then, 12 indexes were chosen to measure the firm growth by principal component analysis, and F-model was chosen to measure the finance risk.Following is the main conclusions of this paper: the higher the degree of diversification strategy, the worse its growth, the greater the financial risk; small and medium-sized listed companies to implement diversity-related business development strategy, its growth potential than the Well, much better than non-related diversification strategy; single-sector small and medium-sized listed companies to implement risk lower than the category of diversified companies, but its poor growth; small and medium-sized listed companies to implement an internal model of development, growth and the financial position of all M & A is better than using an external model.