Agency Problems Equity Ownership And Corporate Diversification

The company’s business strategy is generally divided into specialized business strategyand diversification strategy, business owners and operators tend to make professionalmanagement or diversification of business choice. In theoretical circles, enterprises choosediversification good or specialized management good argument has not stopped.So far, most of domestic and foreign literature show that the companies have chosendiversification strategy tends to give a negative impact on the value of the business, namely,the "diversification discount", the reality of enterprise data to prove the correctness of theabove theory, and now many companies performance better choose professional management.Well, since in theory, tend to business diversification, the reality of some of the data onceagain shows that enterprises select a specific operation are often able to bring more businessenterprise value, but why we tend to see around a lot of companies have chosen is adiversified business strategy, then such a phenomenon in the end is why? This is from thecompanies had chosen diversification other factors to consider, and not simply to consider acorporate discount factors. From the perspective of agency costs to explain this phenomenon.And then consider the past, the traditional agency cost theory to consider the angle is justconcentrated on this aspect of the enterprise managers, managers want to earn more from theirown interests from a wide range of business, taking into account the first class of agency coststhe second class of agency costs, that is, from the perspective of ultimate control, consideringthe major shareholder in the equity balance is the case of separation, the system of theownership structure of listed companies in China to the Company diversified.China’s600listed companies in2010as samples, based on the agency cost of different,ownership structure on corporate diversification effect. The results show that the listedcompany managerial ownership and corporate diversification negatively related with empty,motivation of enterprises, empty motive is more like the enterprise diversification. Inparticular, the private enterprise is more obvious. Then we put forward to strengthen marketsupervision, improve the relevant laws and regulations, protect the interests of investors,while the business owner should appropriately raise the enterprise managers’ shareholdingratio, improve the executive stock options to ensure that corporate interests inviolable.