Diversification Strategy and Comparative Financial Performance in the Chinese Non-life Insurance Industry
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Abstract
This dissertation investigates the impacts of a firm’s diversification strategy and firm-specific
factors on the financial performance in the Chinese non-life insurance industry using data
from 2003 to 2007. The return on assets and risk-adjusted return on assets are chosen as the
proxies of a firm’s financial performance. With the separation of product and geographic
diversification, as measured by a modified Herfindahl index of gross written premiums, the
results from both the panel data analysis and the cross-sectional data analysis indicate that
large firms or firms with a high degree of product diversification outperform the others. In
addition, the inconclusive results from the impacts of the group status, ownership structures
and other firm-specific factors may suggest a complex relationship between the factors and a
firm’s financial performance, which is unique for the characteristics in the Chinese non-life
insurance industry