Ownership Structure and Corporate Diversification
AbstractThis paper examines the motivation and impact of corporate diversification in Chinese listed firms. We find that in local government owned-firms there is a non-linear relationship between the level of firm diversification and state ownership. As state ownership increases from zero, the level of diversification decreases. After state ownership reaches a certain level, the level of diversification increases as state ownership increases. There is no evidence that ownership is related to corporate diversification in non-state-owned firms or central government-owned firms. We also document that diversification is negatively related to firm performance in local government-owned firms. However, there is no evidence that diversification is negatively related to the firm performance in non-state-owned firms or central government-owned firms. Our findings suggest that agency problems are responsible for local government owned-firms taking value-reducing diversification strategies.
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Bibliographic InfoArticle provided by De Gruyter in its journal Business and Politics.
Volume (Year): 8 (2006)
Issue (Month): 1 (April)
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Web page: http://www.degruyter.com
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- Ducassy, Isabelle & Prevot, FrÃ©dÃ©ric, 2010. "The effects of family dynamics on diversification strategy: Empirical evidence from French companies," Journal of Family Business Strategy, Elsevier, Elsevier, vol. 1(4), pages 224-235, December.
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