Research Of The Relationship Between Diversification And Firm Performance Of Listed Real Estate Enterprises

In recent years, the real estate industry has make a great contribution to Chinese remarkable economic development. The mode of diversified operation has been chosen by some enterprises, due to the increasingly fierce market. As a significant part of strategic management subject area, plenty of scholars have made deep research on the diversification and obtained abundant results. However, it still hasn’t come to a conclude refer to the relationship between diversification and firm performance.In this report, 92 property companies from Shenzhen and Shanghai A-shares have been chosen as the sample, which used to analysis the relationship between diversification and firm performance. According to the primary and secondary date analysis, it indicant that 73.92% of the total real estate industry proceed multiple operations, even the property business is highly profitable. Whereas, most of them are merely operated two or three related industries, such as estate management. Compare with other industries, the diversification of property industry is still keep in a lower level, there is not a positive relationship between diversified operation and firm performance. It is also shows that increasingly real estate enterprises started to proceed diversification, even it is not contribute to the firm performance. According to this special phenomenon, it obtain that diversified operation could reduce the dependence of property industry to a particular industry, which weaken the effect of market fluctuation to the total real estate industry. Moreover, property companies also could release the pressure of the real estate development capital chain through proceed multiple operations, if the property industry no longer highly profitable. Additional, this has also strengthen the anti-risk capability of real estate industry. For the property industry, there is still have other issues which could affect the business performance, and diversified operation hasn’t offer obvious affect on it. What’s more, specialized operation,related diversification operation, and unrelated diversification operation haven’t show too much difference which effect on the business performance. At last, after deeply research, it shows there is a positive relationship between the assets of the enterprise and firm performance, asset accumulation could be treat as an effective way to achieve better business performance management.