Influence of Corporation Governance Structure on Diversified Operating

This paper uses samples of non-financial listed companies in Shenzhen and Shanghai from 2004 to 2006 to make empirical verification of the relationship between corporation managing structure and selection of diversified operating strategy. This research indicated that there were dual agency conflicts between personal utility-maximizing and entrenchment effect of majority stockholders which significantly influences improvement in diversified operation. Check-and-balance of ownership,effective mechanism of board of directors will reduce agency cost so as to bring down possibility of diversifying.