The Influence Of Diversification On Debt Financing And Financial Risk Of Chinese Listed Company

Diversification or professional management ? Will diversity add value to the company and increase the company's ability to withstand risk ? This is an important issue that academic and practical circles have been paying attention to.Portfolio theory argues that diversified investments can reduce the company's risk.However,many of the diversified companies are in financial trouble.So can the financial risks of a company be diversified through diversification strategies ?This paper mainly discusses two aspects: First,whether the company's financial risk can be dispersed through the diversification strategy,and the second is to explore how diversification affects the financing of corporate debt,which affects financial risk.In this paper,we use the data of the listed companies of a-share manufacturing in China for 2014-2016 as the research object.The regression analysis method is used to examine the data,and the conclusion is as follows:(1)The degree of diversification is positively correlated with financial risk.This means that the more diversified a business is,the greater the financial risk.(2)The degree of diversification has a significant positive correlation with the balance-sheet ratio.Shows that the more diversified a company is,the bigger the debt.(3)The degree of diversification is positively correlated with the short-term debt ratio.It shows that the more diversified the enterprise,the more serious the phenomenon of "short-term" debt maturity.(4)The degree of diversification is positively correlated with "short borrowing and long investment".The higher the degree of enterprise diversification,the worse the maturity match between assets and liabilities.These results show that diversification will increase the financial risk of enterprises.From a financing perspective,diversification can lead to excessive borrowing by enterprises and excessive use of short-term debt for long-term investments,which in turn poses a higher financial risk,which also means that diversification of investment funds take a long time,the cash recovery effect is poor,financial risks have increased;it is further stated that financial risks at the corporate level can not be reduced through diversified expansion and that the scope of application of the portfolio theory is limited.Therefore,in order to reduce the financial risk of enterprises,it is suggested that enterprises should understand the source of financial risk from the selection level of strategy,take a cautious attitude towards diversification,separate or divest non-core business in time,and concentrate on the main business.