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Diversification strategy, ownership structure, and financial crisis: Performance of Chinese private firms
Author(s)
Date Issued
2018
ISSN
2041-9945
Citation
Asia-Pacific Journal of Financial Studies, 2018, vol. 47(1), pp. 54-80.
Type
Peer Reviewed Journal Article
Abstract
The relationship between diversification and firm performance varies among institutions and over time. Less is known about the advantageousness of diversification in economy-wide crises, which have occurred frequently in recent years. Using data on nearly 4000 Chinese private companies, we found that diversified firms performed better than focused firms during the recent global financial crisis. The diversification level was positively and linearly related to performance, that is, more diversified firms performed better. Moreover, we found that private firms that are totally owned by the founding owner and his/her family performed worse under crisis.
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