The Impact of Diversification Strategy on Corporate Performance:Based on Agency Theory

By the data from the listed manufacturing companies from 2003 to 2009,analyses have been done to discover the impacts of diversification on performance.The results show that firstly diversification has negative effects on corporation performance;secondly,different kinds of agency cost significantly negatively related with performance,while the agency problems between the controlling shareholder and minority shareholders have no negative relationship with performance;thirdly,diversification increases the agency costs between shareholders and managers,while reduces the agency costs between the controlling shareholder and minority shareholders.