Purpose There is by far no consensus reached in the academia about the implications of business diversification model for companies. Meanwhile, in the process of China’s economic development in recent years, be it the real economy or the capital market, real estate companies have played an arguably important role. Design/methodology/approach This thesis based on behavioural finance theories and through theoretical analysis and empirical test, expounds how the diversification strategy of listed real estate companies in China is influenced by the characteristics of senior executives, major shareholders and independent directors in the corporate governance structure. Findings The research has found that corporate governance behaviour has a significant impact on the diversification of listed companies in China’s real estate industry. Research limitations/implications The limitations of this thesis are reflected in its narrow scope of research which only focuses on publicly listed real estate companies and a more micro-oriented perspective on research. Practical implications The research findings will provide rational guidance to the diversification behaviours of listed companies in China’s real estate sector. Social implications (if applicable) The research findings will influence investors’ decision-making with regard to these companies. Originality/value The innovation of this paper mainly lies in the organic combination of behavioural finance theories and the diversification practices of China’s listed real estate companies. Keywords diversification, corporate governance, behavioral finance, real estate industry, China stock market