From the perspective of capital investment, this paper studies the impact path and mechanism for diversification strategy on firm value in real estate listed companies. The results show that there are two kinds of agency problems in diversified companies. One exists between shareholders and top management, and the other is between top management and department managers. Because of the problems, diversification always leads to over-investment, which makes marginal value of capital investment decrease. This conclusion not only expands the research framework of the relationship between diversification strategy and firm value in theory, but also provides new decision evidence for management and investors in practice.
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