Abstract: This paper used A-share listed companies in Shanghai and Shenzhen stock markets from 2012 to 2018 as research sample to investigate the impact of performance feedback on the expansion change strategy of subsidiaries. The empirical results find that: in contrast with stand-alone firms, subsidiaries are more sensitive to the performance feedback-expansion change relationships. The influence of business groups is mainly reflected in the following aspects: the administrative management of the parent company to the subsidiary company strengthens the positive influence of negative performance feedback on the expansion change strategy, the capital management of the subsidiary company promotes the expansion change strategy,and negative performance feedback weakens the positive impact of capital inflow on the expansion of subsidiaries.The further study finds that: whether the enterprise group adopts administrative management or capital management on its subsidiaries depends on the performance of the subsidiary companies; the negative performance feedback of the subsidiary companies′ risk expansion behavior improves the operating difficulties.

Key words: performance feedback, corporate expansion, business group