Research On Governance Effect Of Cross-shareholding

Cross-shareholding is one of usual methods for capital operation especially inJapan. In the past half a century, the rise and fall of Japanese economy inflectsthe history of cross-shareholding. During that period, Japan has enjoyed thesweetness that cross-shareholding promoted economy, while it still suffers thepain that cross-shareholding strengthen recession. The history proves thatcross-shareholding plays a role not to be neglected in building modern enterprisesystem at the same time it is a sword with two blades. So it is necessary to takefurther consideration of cross-shareholding and its effect. Cross-shareholdingmodel in China origins from the reformation of state-owned companies and iswidely accepted by listed companies and becomes part of corporate governanceafter more than two decades’ development. However, academy has not yetstudied on that. Based on this, this paper attempts to research on the subtleinfluence of cross-shareholding to governance under the frame of theprincipal-agent theory. It selects5241samples of A stock listed companies fromShanghai and Shenzhen Stock Exchange, and the empirical evidence shows thatthe existence of cross-shareholding helps prevent opportunism behaviors of topmanagement and control owners. In a sum, cross-shareholding is useful torelieve agency conflicts and improve quality of governance.