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Diversification and Corporate Performance: Evidence from China’s Listed Energy Companies

Author

Listed:
  • Qiming Li

    (School of Business Administration, China University of Petroleum, No. 18 Fuxue Road, Changping District, Beijing 102249, China)

  • Wenhuan Wang

    (School of Business Administration, China University of Petroleum, No. 18 Fuxue Road, Changping District, Beijing 102249, China)

  • Yiping Lou

    (School of Business Administration, China University of Petroleum, No. 18 Fuxue Road, Changping District, Beijing 102249, China)

  • Ke Cheng

    (School of Business Administration, China University of Petroleum, No. 18 Fuxue Road, Changping District, Beijing 102249, China)

  • Xiaoguang Yang

    (School of Business Administration, China University of Petroleum, No. 18 Fuxue Road, Changping District, Beijing 102249, China
    Academy of Mathematics and Systems Science, CAS, No. 55 Zhongguancun East Road, Haidian District, Beijing 100190, China)

Abstract

Recently, China’s energy industry has been continuously depressed due to a slowdown in its economic development. China’s energy companies have made considerable efforts to promote their corporate performance to mitigate this performance decline and to ensure the sustainable development of China’s energy industry, macro economy, society and environment. In this paper, the effects of two business strategies—industrial diversification and international diversification—on the performance of listed energy firms are empirically investigated. The empirical results show the following: (1) industrial diversification hinders corporate performance; (2) for industrially-diversified energy companies, related diversified strategies are more effective than unrelated diversified strategies; and (3) international diversification improves the performance of renewable energy firms, but hinders the performance of conventional energy firms. These results suggest that as economic conditions are not currently optimal, China’s energy companies should pay more attention to their main businesses and generate more products to satisfy market demand.

Suggested Citation

  • Qiming Li & Wenhuan Wang & Yiping Lou & Ke Cheng & Xiaoguang Yang, 2016. "Diversification and Corporate Performance: Evidence from China’s Listed Energy Companies," Sustainability, MDPI, vol. 8(10), pages 1-17, September.
    • Handle: RePEc:gam:jsusta:v:8:y:2016:i:10:p:983-:d:79380
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