The Relationship Between The Diversification Degree And Company Performance Of Agricultural Listed Companies And Corporate Performance

Diversification is that the company has developed to a certain level, in order to obtain the sustainable development as well as more profit and takes one kind of management behavior, or strategy. There is no conclusion whether the Diversification is good or bad for the company’s development. In the early time, influx of a large number of enterprises joined in the diversified development in developed countries and regions, but soon started a large-scale businesses-off, hoping to get rid of the disadvantages of diversified management. With the development of our country’s economy, the economic environment is becoming more and more open, and the economic system is shunting continuously. There are more and more enterprises begin to explore the diversified development, hoping that through the development of multiple directions to explore new economic growth points and open up new markets. But different industry faces different competition environment, consumer demand and innovation pressure. Some enterprises which belong to different industries get success in diversified development, but more enterprises can not get collaborative ability and achievement sharing capacity, so it makes the enterprise was immersed in large and improper abyss, no core competitiveness.Does the same question to agricultural enterprises exist? Agriculture as the foundation of our country and strategic industry is the national economy foundation. It plays an important role for the maintenance of the stable development of China’s economy and the people’s livelihood in the long period of stability. In the present economic situation, the Chinese government actively promotes the economy turning extensive growth to intensive growth, and the traditional agriculture products faces great challenges, so it needs transform to agricultural modernization. Since reforming and opening of China, in order to promote the industrialization of agriculture. China increase policy support and subsidies. Many agricultural enterprises explore diversification to expand the scale, increase business unit. Diversified development is a really faster method to achieve business expansion. But in fact in our country, a considerable part of the listed agricultural companies in the diversification neglect their main business development to investment in real estate, medicine and agriculture which is not related to agricultural. This is the so-called" non-agricultural". But in fact, the agricultural company which adopts the diversification strategy performance out do not as good as expected, and even worse than before. Does the diversification promote the development of enterprise or drag down the business forward for the agricultural companies? In other words, what is the relationship between the diversification and corporate performance? Should the agricultural listed companies explore diversification? Whether the method of diversification they choose, related or unrelated diversification, can promote their corporate performance?We choose the problems as the starting point, firstly on the basis of previous studies, reviewed and summarized the theory of the diversification, firm performance and the relationship between them. In view of relationship between Chinese Agricultural enterprise diversification and firm performance, now exist three kinds of views:positive correlation, negative correlation and no significant relationship. Because our research is targeted at China agricultural enterprises, so the background must be put in the Chinese economic environment. The research conclusions are mostly carried out by western scholars who study the European and American enterprises. The enterprise of China draw limitedly lessons from a meaning. And now the study for the Chinese agricultural industry’s diversification and firm performance is less, so this study has great significance.In this paper, the former theory and point of view as the basis, we analyze the diversification and performance of agricultural listed company existing, and put forward three hypotheses respectively:Hypothesis Ⅰ:on the whole, the relationship of the degree of diversification of agricultural listed companies and corporate performance is negative; Hypothesis2:related diversified agricultural companies’performance is better than related diversified companies’ performance; Hypothesis3:the relationship between the degree of diversification of unrelated diversified agricultural companies and corporate performance is negative.In order to verify the above hypotheses, we choose the current A stock market existing agricultural listed companies (65) as samples, through the relevant data to calculate each company corresponding degree of diversification, then we obtain sound sample (62), and carry out diversified company sample (40). Through the classification, we take diversification degree as the dependent variable, company performance as independent variables, the scale of assets, growth and the listed years as control variables for empirical analysis. Hope that the empirical conclusion can explain the question that diversification is beneficial or not to the performance of the company growth? What kind of diversified operations is suitable for the agricultural listed companies in China? We hope the paper can promote the sustainable development of agricultural listed companies, give advises to more companies that involved in agricultural modernization development, and give reference to other types of enterprises.