Research On Effect Of Cross-shareholdings To Enterprise Value Of Chinese Listed Companies

The development of Cross-shareholdings in our country originated from the early 90's , 20th century. At that time, companies in China lacked of financing generally. However, the cross-holdings' relationship between companies can effectively make use of Virtual capital, which can help a lot of large-scale state-owned companies reach capital scale of access to capital markets at the early stage of joint-stock reform. At the same time, corporate cross-holdings can not only highlight the role of business groups, but also maintain joint-stock reform on the basis of "public ownership". This kind of institutional advantage also led to the prevalence of cross-shareholdings. At present, with the increasing complexity of shareholding structure of modern companies, companies in China is entering a period of high frequency of mergers and acquisitions, and the methods of capital operation also become diversified. Especially the split share structure reform in 2005 improves the difficulty of monitoring capital operation for the management department of securities market. Corporate cross-holdings is not only an usual method of company capital operation, but also a common way of development. Therefore, the research of corporate behavior of cross-holdings is extremely important.The research object of this paper is to find the effect of cross-shareholding ratio on enterprise value, so that this paper designs a model of enterprise value. The model carries out regression analysis separately, from the whole sample and sub-samples with different economic nature of enterprise, with enterprise value as the dependent variable and cross-shareholding ratio as the independent variables. This paper also designs enterprise performance model and market risk model, in order to research the impact of cross-holdings on enterprise value from different perspective.This paper selects 225 A-share listed companies as research sample in Shanghai stock market and Shenzhen stock market, which is in cross-shareholding situation, and collects cross-shareholding ratio date, value data, corporate performance data and other relevant data from 2006 to2008. Based on the theoretical analysis of cross-shareholding, this paper proposes assumptions corresponding to three models above, and draw conclusions through data analysis.This paper find that the proportion of cross-holdings has significant positive amplification to corporate value; the proportion of cross-holdings appears a positive correlation with enterprise performance at high levels of significance and a negative correlation with market risk; enterprise performance and market risk has a direct correlation with the enterprise value. Therefore, the results of analysis of enterprise performance model and market risk model verify the conclusion of enterprise value model.Behavior of cross-shareholdings in listed companies in China is become more and more common, which attracts the increasing concern of many enterprises. However theory and practical research on cross-shareholding in our country is on the primary stage, and many problems need to research farther, which is also the following research for this paper.