Diversification, Financial Performance and Firm Value: Evidence from Listed property companies in China

摘要

Using data from 2001-2003 annual reports of publicly listed companies in China, this paper examines the relationship between level of diversification and financial performance and firm value of the listed property companies, and the effect of geographic diversification is also discussed. The empirical evidence suggests there is a negative relation between financial performance and level of diversification, but the relation between the measure of firm value, Tobin's q, and the level of diversification is positive, but insignificantly. The geographical diversification strategy seems not profitable and value-enhancing for property companies during the sample period.