EconPapers    
Economics at your fingertips  
 

Does diversification help improve the performance of coal companies? Evidence from China's listed coal companies

Chong-Mao Li, Tao Cui, Rui Nie, Han Lin and Yuli Shan

Resources Policy, 2019, vol. 61, issue C, 88-98

Abstract: As an important component of the natural resources and energy market, China's coal market has experienced a continuous downturn in recent years. Many coal enterprises have been diversifying their businesses in an effort to enhance their corporate performance. Although many studies have examined the relationship between diversification and performance, researchers have not reached a consensus regarding the nature of this relationship. Additionally, to our knowledge, no study has specifically examined this relationship in coal enterprises. In view of China's coal industry characteristics, such as natural resource dependence and state ownership, other industries’ diversified development could not provide good consults for it. In this study, we investigate the relationship between diversification and corporate performance by analyzing the business data of all of China's listed coal enterprises. After determining 35 listed coal enterprises’ main business and the proportion of their profit from the coal business, we choose 10 enterprises as representatives. Correlation and regression analyses including the time-series data analysis and panel data analysis are conducted to examine the relationship between diversification and performance. The results indicate that this relationship varies across firms; we observe nonlinear, positive linear, negative linear, and nonexistent relationships in the sample. Therefore, diversified development is not the “panacea” for the decline of coal enterprise. Enterprise performance is determined by integrated internal and external factors beyond diversification, including the market environment, the industry environment, and policy. Coal enterprises that aim to develop diversification strategy should be cautious. In addition, this study can serve as a reference for other energy enterprises that are planning to diversify their business to improve performance.

Keywords: Coal enterprises; Diversification; Performance; Relationship (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301420718300606
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:61:y:2019:i:c:p:88-98

DOI: 10.1016/j.resourpol.2019.01.013

Access Statistics for this article

Resources Policy is currently edited by R. G. Eggert

More articles in Resources Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-19
Handle: RePEc:eee:jrpoli:v:61:y:2019:i:c:p:88-98