A Comparative Study of the Governance Structures of Companies with Different Diversification Strategies——Empirical Evidence from Listed Manufacturing Companies in Shanghai Stock Exchange

摘要

In this paper, we use data of manufacturing companies listed in Shanghai Stock Exchange to compare the governance structure differences between different diversification strategies, and those between pre- and post-strategic-change. We propose that due to the effects of China's modern enterprise system reform, the changing trends of corporate governance structures in Chinese listed companies are identical, but there are still some effects that corporate governance has on the diversification strategy. With the change of diversification strategies, the governance structure should also be adjusted. We argue that low compensation and shareholdings prompt managers to diversify their companies, but it does not follow the pattern that the more diversification, the more managerial compensation and shareholdings; on the contrary, large specialized companies with a long listing time provide higher compensation to their managers than their diversified counterparts. What is also contradictory to the existing studies in western countries is that unrelated diversification companies do not have the largest board and independent director ratio. Besides, the management size is larger in diversified companies than in specialized companies, a finding consistent with western studies.