Research on the Effects of Real Estate Enterprises Diversification on Their Financial Risks

Yutong Yang

doi:10.54691/bcpbm.v21i.1297

Authors

Yutong Yang

DOI:

https://doi.org/10.54691/bcpbm.v21i.1297

Keywords:

Financial Risk, Diversification, Real Estate Enterprise, Financing Constraint, Equity

Abstract

In recent years, under the dual influence of national policies and market fluctuations, the development of the real estate industry has shown an obvious downward trend. Up against this background, real estate enterprises have begun to try the diversified operation. However, their results of diversification are different. Some enterprises have found new profit growth points, while others are facing huge financial risks and even debt crises. With the data of Shanghai and Shenzhen A-share real estate listed companies in China from 2010 to 2020 as research samples, this paper constructs a two-way fixed effects model, tests the diversification effects on financial risks, and compares the real estate enterprises that adopt different diversification strategies. The findings are as follows. (1) Real estate enterprise diversification aggravates the financial risks of enterprises. (2) The degree of unrelated diversification has a significant negative correlation with the financial performance of real estate enterprises, while the degree of related diversification has no significant impact on financial risks.

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