Characteristics Of Cross-shareholding Network And Corporate Risk-taking

Increasingly deepening economic globalization and continuously deepening the reform process of the market economy have bred new development opportunities and challenges for Chinese enterprises.On the one hand,the frequent flow of funds and information has spawned a new model of cooperation between enterprises,and China's capital market has gradually formed a cross-shareholding network with enterprises as nodes and equity as connections.As a middle-level organization between the macro market and micro enterprises,the cross-shareholding network transmits various resources such as information,technology and funds while connecting various enterprises.On the other hand,the increasingly fierce competition environment has exacerbated the risks facing enterprises,and requires enterprises to make a balance between stability and development.In fact,if an enterprise wants to maintain long-term competitiveness and achieve sustainable development,it cannot rely solely on conservative investment strategies,and it must appropriately increase its level of risk-taking.A higher level of risk-taking will not only improve corporate performance and enhance competitive advantages,but also accelerate social capital accumulation and achieve sustainable economic growth.Therefore,the level of corporate risk-taking has attracted widespread attention from academia and practice.Judging from the existing research results,the level of corporate risk-taking is affected not only by the subjective influence of decision makers' willingness to bear risks,but also by the objective limitation of the ability of enterprises to obtain resources.So,will the characteristics of the cross-shareholding network affect the risk-taking level of the company? Does this relationship differ between state-owned and private enterprises and between companies with different degrees of financing constraints? Few literatures have discussed this.Based on the Shanghai and Shenzhen A-share market data from 2007 to 2018,the paper takes the companies involved in cross-shareholding in Shanghai and Shenzhen A-share market from 2007 to 2016 as the research object,builds a cross-shareholding network on an annual basis and uses Python's Network X software package to calculate the network centrality and richness of the structural holes of the focus company.The paper examines the influence of cross-shareholding network characteristics on corporate risk-taking and the moderating effects of the ultimate controller's property rights and financing constraints.The main research results are as follows:(1)Panel data regression is used to analyze the impact of cross-shareholding network characteristics on the company's risk-taking level.The empirical results show that the greater the centrality of the company in the cross-shareholding network or the richer the structural holes,the higher the level of risk-taking.(2)The property rights of the ultimate controller are used as moderating variables to study the influence of the characteristics of the company's cross-shareholding network on risk-taking.The empirical results show that compared with state-owned enterprises,the characteristics of cross-shareholding networks have a more significant impact on the risk-taking level of private enterprises.(3)The sample companies are divided into two groups: companies with financing constraints and companies without financing constraints.The self-sampling method(bootstrap)is used to compare the impact of cross-shareholding network characteristics on risk-taking levels between companies with financing constraints and companies without financing constraints.The empirical results show that,compared with companies without financing constraints,the characteristics of cross-shareholding networks have a more significant impact on the risk-taking level of companies with financing constraints.Under the characteristics of China's capital market environment,exploring the relationship between the characteristics of cross-shareholding networks and corporate risk-taking levels is not only a test of the economic effects of cross-shareholding networks from the perspective of risk-taking,but also an important theoretical issue for studying the factors that affect the level of corporate risk-bearing levels.The empirical results in this paper show that the cross-shareholding network will help enterprises obtain resources such as information and funds,and it will also promote the risk-taking level of enterprises.Especially for private enterprises with relatively scarce resources and enterprises facing financing constraints,the promotion effect is even more significant.The research conclusions have good application value in government policy making and enterprise decision-making optimization.