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Determinants of diversification by listed firms
in China |
| JIANG Fuxiu |
| School of Business, Renmin University of China, Beijing 100872, China |
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Abstract This paper empirically studies the determinants of diversification of Chinese listed companies from the perspectives of motivation and conditions. Results show that the traditionally believed motivations of economic rationality, organizational rationality and individual rationality have all exerted influences upon the choice of diversification models. By comparison, the choice of diversification mode for Chinese listed firms is largely based on organizational rationality motivation (to reduce company risks) and individual rationality motivation (in the self-serving interests of the top management). Meanwhile, such conditioning factors as company size, ownership structure, age of being listed, and the industry in which a company is all have significant effects on the choice and degree of diversification for Chinese listed firms.
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Issue Date: 05 June 2008
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