Diversification Strategy Of Listed Company Of Real Estate In Our Country Empirical Study Of The Impact Of Enterprise Performance

Since the diversification strategy has been proposed, many scholars have researched this problem. However, there is no accordant conclusion. Some people considered that diversification could improve performance and spread risk. And some people considered that diversification could not improve performance. And a few people considered that there was no relationship between diversification strategy and enterprise performance. Latest researches consider that there is nonlinear relationship between them.Compared to European and American countries, China’s real estate industry started much later and it began to develop rapidly after1999. The development of real estate industry can boost investment and consumption demand, can not only improve the efficiency of land using, increase social wealth, make other related industries develop, but also increase employment opportunities. The real estate industry has gradually developed into a pillar industry in China and affects the development of national economy. Now, how many real estate enterprises that put diversification in practice are there in China? What about their performance then? And how diversification strategy affects real estate enterprises’performance? Explaining these questions can not only enrich the research domain of diversification and enterprise performance, but also can provide theoretic guidance for the real estate enterprise to establish right development strategy.To explain these questions above, at first, this paper summarized predecessors’ research. Then, it defined the concept of diversification strategy and enterprise performance and analyzed that how diversification strategy affected enterprise performance, as well as their influence factors. Then it selected the real estate enterprises that listed in Shanghai and Shenzhen stock exchange as the research object, selected a total of194sample points from2007to2009, and used PLS structural equation modeling method to quantificationally study how diversification strategy affected enterprise performance. Finally, the study concluded:the degree of diversification had negative correlation with enterprise performance; the higher of diversification, the worse enterprise performance, and the diversification made enterprise lose value. There were also other factors that affected the degree of diversification and enterprise performance. The solvency had positive correlation with diversification degree; the state-owned real estate enterprises had higher degree of diversification than non-state-owned real estate enterprises; the development potential, firm size and solvency had positive correlation with enterprise performance. Finally, the paper also raised recommendations for the listed real estate enterprises to diversify, they are:Refocusing management, training the core competitiveness; diversification and quality for real estate goods; specialization for industry but diversification for products.