Durham University Business School, Durham University, Durham, UK
Diversified business groups are a relatively common form of modern economy, which plays a key role in China's economic development and market process. Under the new economic situation, diversified business groups conform to the trend of economic development and play important roles in optimizing capital allocation, promoting labour employment, and enhancing brand strength. However, the development of diversified business groups is a "double-edged sword", and the positive and negative effects it brings must be fully considered. This paper discusses the formation reasons and advantages of diversified business groups in China, and also objectively analyses the tunneling behaviour, diversified discounts and rent-seeking problems that occurred during the development process.
Diversified business groups, Capital allocation, Tunneling behaviour, Diversified discounts, Rent-seeking
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