Empirical research of relationship between the level of diversification and corporate performance on China listed company

In this study, According to logic of business diversification and firm performance, assuming exists an optimal degree of diversification enterprises under certain conditions, according to empirical analysis of 109 listed companies, we get two conclusions: First, the higher level of diversification of listed companies, its Price-earnings Ratio is lower, that is to say it is harder to get approval by the market. Second, towards the listed companies in China, the level of diversification is not the higher the better, only in this way of rational allocation and making full use of the companys own resources and core competencies can we obtain the best performance.