Research On The Influence Of Real Estate Enterprise Diversification On Financial Risk

For the past few years,with the introduction of many regulatory policies such as "no speculation on housing" and "three red lines",the real estate industry has encountered many problems such as slowing growth and declining profitability.In order to find new source of growth point and achieve the sustainable development,Chinese real estate enterprises have begun to carry out diversified business layout.The characteristics of "high assets and high leverage" in the real estate industry also make it inevitable for enterprises to further expand their debt scale and increase expenses in the process of diversification,while diversified business income is uncertain,which may further aggravate the financial risks of enterprises.Therefore,accurate evaluation of the impact of diversification on the financial risks of real estate enterprises and timely identification of risk drivers for control are crucial to the real estate enterprises diversified transformation in China.A-share real estate listed companies from 2011 to 2020 are selected as research samples and combined with the diversification case of Greenland Group,respectively,through empirical test and case analysis to study the impact of real estate enterprise diversification on financial risks.The results of empirical find that the diversification of real estate enterprises in China significantly increases financial risks,and different types of diversification will increase financial risks,and unrelated diversification is more significant.For real estate enterprises in different life cycles,non-related diversification will aggravate corporate financial risks,while related diversification only significantly increases corporate financial risks in growth and recession periods.In addition,the case analysis results of Greenland Group show that the financial risks of Greenland Group increase significantly in the process of unrelated diversification,and its asset-liability ratio remains high,financing costs are high,capital recovery capacity is poor,and costs and expenses are further expanded.At the same time,the profitability of diversified businesses can not reach the level of the core business of real estate,which lowers the profitability of the enterprise as a whole.The contribution of this essay is to probe into the relationship between the diversification of real estate enterprises and financial risks,enrich the research perspective of diversification,and provide reference for the diversification transformation and business layout of real estate enterprises in the future.