Research On Diversification Effect On Financial Risk Of Agricultural Listed Companies

By the end of 2014, There are a total of 41 listed agricultural companies, plays an important role among regions and China’s overall agricultural economy and agricultural development. Due to the consideration of agriculture are greatly influenced by natural factors, coupled with the lag of agricultural production compared to the market demand and more policy intervention, make agricultural companies face greater risk. So compared with other industries, agricultural listed companies are more likely to diversification. However, their relatively backward management system, lack financial risk consciousness, or the condition of excessive diversification blindly, cannot give full play to the effect of diversification, but due to the increasing of the business unit dispersed enterprise’s cash flow and limited economic resources, affect the enterprise’s financial risk.In this study, empirical research of diversification effect on the agricultural listed company financial risk as the main line, based on the theoretical assumptions, status quo of the samples of the agricultural listed companies and its diversification and the financial risk is analyzed. To get the overall characteristics of diversification from individual analysis, the industry, diversified categories and corresponding income is analyzed. From the comprehensive financial risk index F index and two levels by ST company nearly three years, comprehensive and focused analysis of agricultural listed companies financial risk present situation.On this basis, in the agricultural listed companies from 2012 to 2014 data as sample, carry on the quantitative research by using multiple linear regression model three times, respectively in the number (N) involving industry, Herfindal index (H), diversified types (DIV) as the explained variable, F index as explained variable, analysis the influence on the degree of diversification and types to financial risk, and then puts forward the rational utilization of diversification strategy, control the financial risk, relevant countermeasures and suggestions to promote the development of agricultural listed companies.The results show that, the number of involved industry has no effect on financial risk, the higher degree of diversification helps to reduce financial risk, the related diversification management helps to reduce financial risk, and by other factors control financial risk.Based on the research conclusion, four suggestions are put forward.First encourage agricultural listed companies on the basis of the agricultural implement diversification; Second,maintain dominance of agricultural business, strengthening the construction of agricultural brand; Third, reasonable arrangement of debt financing, balance the cost of financing and financial risk. Last, build a sound system of internal control, reduce the risk of financial control. Four aspects advice help the agricultural listed companies make better use of diversification strategy.